Technofeudalism – is capitalism dead? (2025)

From the November 2025 issue of the Socialist Standard

Socialists might seem a bit obsessed with how words are used, not because we consider ourselves to be the special constables of whatever language we speak, but because we are interacting with our fellow members of the working class, engaging with ideas about what words represent and defending and advancing our political tradition, in order to gain working class freedom.

So it is of some interest that we have had a globally known political individual, celebrated by many, stating in bold capital letters on the back cover of his book that ‘CAPITALISM IS DEAD WELCOME TO TECHNOFEUDALISM’.

It is this assertion, made popular by Yanis Varoufakis with his book Technofeudalism – What Killed Capitalism (2023) and its consequences that will be examined here.

Two years before the publication of Varoufakis’s book, a French academic published a book titled Technofeudalism: A Critique of the Digital Economy which argues along similar lines to Varoufakis’ book but with a more philosophical perspective. Durand puts the root of the digital economy’s structure in what he calls ‘The Californian Ideology’ – radical individualism, libertarianism, and neoliberalism emerging from Silicon Valley – but does not go as far as stating that technofeudalism has replaced capitalism. Varoufakis mentions Durand’s work in the acknowledgements of his book.

The book by Durand locates the first use of the word ‘technofeudalism’ to a science fiction role playing game manual – the GURPS (Generic Universal Role-Playing System) Cyberpunk Adventures where it is mentioned once:

‘As the world becomes tougher, the corporations adapt by becoming tougher themselves, out of necessity. This “we protect our own” attitude is sometimes called techno-feudalism. Like feudalism, it is a reaction to a chaotic environment, a promise of service and loyalty from the workers in exchange for a promise of support and protection from the corporation’.

GURPS Cyberpunk Adventures book has an interesting story in itself: the editor’s home and publisher’s office were simultaneously raided by the US Secret Service who were under the impression that the book was a computer hacking manual and confiscated the disks containing the book. The publishers got them back in the end although the hard drives no longer worked and the book had to be re-written from memory. Several of the people involved in that episode went on to become founder members of the Electronic Frontier Foundation.

Technofeudalism

In the body of Varoufakis’s book, the author makes the case for technofeudalism in the form of a conversation with his father, who had recently died. There are lots of interesting examples, anecdotes, bits of history, and the recalling of conversations about current events as they happened in the context of his father nearing the end of his life. The book has an appendix named The Political Economy of Technofeudalism, where Varoufakis lays out his case in a much more direct way.

In the main part of the book there are lots of sweeping statements made without qualification, and somewhat gross generalisations. The author makes similar statements in some of his interviews. He has said capitalism ‘is defined by profits and markets’ and left it at that, but in this appendix he shows a greater understanding:

‘Under feudalism, the power of the ruling class grew out of owning land that the majority could not own, but were bonded to. Under capitalism, power stemmed from owning capital that the majority did not own, but had to work to make a living. Under technofeudalism, a new ruling class draws power from owning cloud capital whose tentacles entangle everyone’.

‘Cloud’ here means data centres. That data may be data (information) or it may be code which enables networked software like Zoom to work. Like most resources in capitalism, the cloud is mostly owned by a few capitalists and is thus used to ration access to software and data via subscription services, such as Netflix.

Capitalism

Varoufakis states there are eight keys to understanding capitalism: commodity production; distribution of revenue into wages, interests, rents and profits; circulating money capital; capital accumulation, frequent crises; social classes (capitalist, middle class, waged labourers); extractive power (inequality and state enforcement); and a ‘techno-structure’; marketing and behavioural modification infrastructure.

Varoufakis also has a spin on the Labour Theory of Value to support his view. He states that value in capitalism has an experiential form – which seems to be synonymous with what Marx called use-value – examples given include – both commodities such as drinking water – and non-commodities like sunsets, or feeling appreciated. Exchange or commodity value, he states, is a quantity at which goods and services trade for one another. Labour is treated as a separate category but in similar terms as experiential labour and commodity labour. He states the ‘exchange value of commodity labour equals the sum of experiential labour that other workers have put into commodities that a worker’s wage can buy’.

According to Varoufakis two main forces cause capitalism to enter crises – the falling rate of profit and debt crisis (financiers going on credit strike). Rent he considers to be any price paid by a buyer above the price which most closely reflects the exchange value of the commodity. This includes ground rent, financial rent (interest), monopoly rent and brand rent (higher prices associated with in-demand brands, eg Apple computers or Nike training shoes). Varoufakis considers capitalism to be driven by profit and private debt.

Private debt he says is created by financiers from thin air – which qualifies him as a bit of a ‘currency crank’ – his note on this simply says bankers create loans from thin air by an audacious transfer of future values to the present. In the main text he states:

‘Most people think that banks take Jill’s savings and lend them to Jack. That’s not what banks do. When a bank lends Jack money, it does not go into its vault to check it has enough cash to back the loan. If it believes Jack will return the loan, plus the agreed interest, all the bank needs to do is add to Jack’s account the number of dollars it lends him. Nothing more than a typewriter or, today, a few strokes on a keyboard are necessary’.

We would disagree here and state that crises are caused by the chaotic nature of capitalist production that doesn’t know when to stop producing. Debt crises are a symptom of over-production in the real economy. The falling rate of profit is a real tendency but is generally negated by the development of new markets and labour market flexibilities. The Thin Air Theory of Debt is debunked (as detailed in the Socialist Party Pamphlet The Magic Money Myth). There is no reason to extend the concept of rent to the price pain of money loans (interest) or monopoly prices.

Cloud serfs, cloud proles and cloud fiefdoms

Varoufakis goes on to define technofeudalism. He starts with cloud capital, defined as the agglomeration of network machinery, software, AI-driven algorithms and communications hardware criss-crossing the whole planet and performing a wide variety of tasks. These include inciting billions of non-waged people (‘cloud serfs’) to work for free at replenishing cloud capital’s own stock (eg by uploading photos and videos to Instagram or TikTok, or submitting film, restaurant and book reviews, allowing their every click to be tracked across their social media use). Two further ideas central to his case are introduced here: the industrialisation of marketing to buy goods on platforms (‘cloud fiefdoms’), plus and the enhanced automation of actual physical production of goods by what he calls ‘cloud proles’.

Here the word capitalist is replaced by “cloudalist”. He states that because there are major cloud-based services (such as Twitter/X, or Uber) that have not made significant profits but managed to grow via issuing shares. He also states that Big Tech were the main effective recipients of extra currency produced by central banks in the post-2008 growth period and particularly during the pandemic. Via the money and share markets, and the inflation of the value of fictitious assets low interest loans were obtained to spend on cloud infrastructure. So profit via the direct exploitation of labour, became irrelevant for the cloudalists, instead their focus was on market dominance – the establishment of “cloud fiefdoms”. Varoufakis argues that profit is no longer the goal of the cloudalist, instead they seek “cloud rent” paid by “cloud vassals” (the “terrestrial capitalists” who now sell their goods and services via the cloudalist platforms).

Using social media services is of course not working for Big Tech for free: that is not an obligatory activity for survival based on social class like wage-labour is for most people. In fact, those who are doing the value-creating work are those collecting data – which is a whole industry: it’s the bread and butter of Google and Facebook and their thousands of workers. And almost every other firm selling on the internet is using in-house or third party SEO (search engine optimisation) software and expertise to boost sales by exploiting data about potential clients. It’s as if shopkeepers don’t rearrange their window displays to attract their customers, just because they can now do it remotely tailored for individual customers. Profit is still the driver, and movement of surplus capital from one section to another has always happened, including via the state’s capital which is sourced by skimming off capitalist production by means of taxation.

Many of the trends identified in Varoufakis’ thesis are in fact the continuation of long running trends in capitalism. Capitalists in different sectors are in constant competition for access to shares of the surplus value created by work. As the review in this journal stated: ‘What Varoufakis is analysing is not the downfall of capitalism, but its purest application’.

Critical and uncritical reception

Publicity material for the book garnered positive comments from a variety of sources: ‘The dark scary exciting song of our age’ (Irvine Welsh), ‘An urgent demand to seize the means of computation’ (Cory Doctorow), ‘Remarkable’ said the Financial Times who made it ‘Best Book of the Year’, ‘This is the world grappling with an entirely new economic system and therefore political power’ (Observer).

Several Trotskyist papers criticised the book on similar lines as this journal. Meanwhile a lengthy review in Jacobin Magazine said it was wrong about serfdom and that the economy still relies on a class of wage labourers.

However, for every review that seriously engaged with the idea and agreed that capitalism was not dead and that technofeudalism was not a new form of society, there are a multitude of newspaper reviews and blogs that just repeat the ideas in the book – trading on the excitement of something apparently new, it seems. Whilst not widespread, we have seen the term ‘technofeudalism’ spring up across social media: in posts by commentators suggesting that it is now the new social system and needs to be escaped from, in adverts for security software that will prevent cloud serfdom, for crypto-currencies, and for introductions to join slightly shady looking discussion groups on Telegram which promise to spill the beans on how to break out of the system.

Viewed generously Varoufakis’s contribution in Technofeudalism – What Killed Capitalism has put discussion of ideas about capitalism, the system we have now, into the ‘Recent Publications’ section of bookshops and libraries, both physical and in the cloud. But socialists have not been convinced that capitalism is dead. What it will take to kill capitalism is a politically organised working class that understands capitalism and wants socialism.

PDH

Blogger's Note:

There is a review of Yanis Varoufakis' book by Pik Smeet in the January 2024 issue of the Socialist Standard.

Letter: Debt slaves or wage slaves? (2012)

Letter to the Editors from the October 2012 issue of the Socialist Standard

Debt slaves or wage slaves?

David Graeber replies to our review of his book on Debt in August’s issue

Dear editors:

You may be surprised to know I have read Capital, and am familiar with the concept of primitive/original accumulation. I might suggest it is the reviewer, rather, who might wish to expand his reading list, since he is evidently unfamiliar with that strain of the Marxian tradition that has most informed my analysis of such matters: the “autonomist” or “post-workerist” strain that runs through Tronti to Cleaver to the Midnight Notes collective, Federici, Caffentzis, and de Angelis (a very different one from the more familiar Negri strain). In that tradition, “primitive accumulation”  is not treated as a one-time thing that somehow teleologically prepared the way for capitalism, but rather as part of an ongoing process of the enclosure of different sorts of commons (and the creation of various forms of capitalist commons, like, currently, the US military) that has marked capitalism’s history from beginning to – hopefully its rapidly approaching – end. I actually cite my sources here in a footnote the reviewer seems to have missed. In fact he doesn’t seem to notice that my entire analysis of post-war economic cycles is based in this tradition.

What I was mainly trying to address in the section on capitalism is a question that to my knowledge no Marxist analysis has really been able to resolve: why, if capitalism is a system based on factories and free wage labor, did most of the financial institutions that we associate with it – stocks, bonds, futures trading, semi-private central banking systems, and so on – actually arise in the 17th century, long before either factories or (any significant amount of) free wage labor made an appearance. The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle. If capitalism is a system based on wage labor, then it wasn’t capitalism at all. But if so most bourgeois revolutions happened before capitalism had even appeared! If merchant capitalism is capitalism, then capitalism does not have to be based on wage labor, and certainly not free wage labor, at all. Claiming that merchant capitalism was capitalism because European elites were somehow trying to create a system that didn’t exist and there is no evidence they were even capable of imagining, seems absurd. The obvious answer is that capitalism is not in fact necessarily based on free wage labor contracts. Marx was, as I note in the book, effectively saying “well, let’s take a best case scenario, and imagine workers are in no sense constrained; I can show the system would still lead to impoverishment and self-destruction.” He wasn’t saying that the assumptions of the political economists were empirically true. He was just allowing them for the sake of argument. As I note many seem to have forgotten the “as if” quality of his analysis.

I find it genuinely odd that I get so many reviews that accuse me of ignorance of even the basic ABCs of Marxism, while at the same time, systematically ignore everything I actually say about Marx! Granted, the book is meant for a wide audience, and therefore avoids scholarly debates of all sorts, Marxist or otherwise. But it’s all there in the footnotes. And I do talk about Marx in the text.

As for the reviewer’s final claims that we are primarily wage slaves not debt peons: how does he know this? Because the secret to our 21st century situation lies in the correct interpretation of 19th century texts? That’s silly. Systems change. I mean, it might be true, but it’s a matter to be empirically established. A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce – that is, from the exploitation of wage laborers. Where does that profit really come from? It would be very interesting to know what percent of the average (say) American’s income is now directly expropriated by the FIRE [Finance, Insurance, Real Estate] sector, compared to what might be said to be extracted indirectly, through the wage. But the research simply hasn’t been done. Nor will it be if we can’t open up our minds a little and treat Marx’s legacy as a living tradition. It’s possible that the system is already starting to turn into something else. Or maybe it isn’t. Let’s figure it out rather than just shouting doctrine at one another.

 

Reply:

1. As capitalism continues, money-commodity relations are certainly spreading into yet further fields of human activity. However, whether this can be usefully seen as a continuation of the primitive accumulation of capital is another matter. Marx introduced the concept of original (generally translated as “primitive”) accumulation to answer the question of how and from where was the capital to launch the industrial revolution accumulated. Once started, as it had been by the end of the 18th century, capital accumulation became self-generating, out of the surplus value extracted from wage workers. This said, although capitalism in the form of the world market dominates the whole world, the capital/wage-labour relationship is by no means universal. It is still spreading (being spread by the state) in such places as China and India as peasants are driven off the land and obliged to work for wages in factories. So, in this respect, one of the features of Marx’s primitive accumulation is still continuing.

2. We can’t see how anyone can deny that central to Marx’s analysis of capitalism (“the capitalist mode of production”) is the capital/wage-labour relationship, whether or not they agree with this. But this is not the only feature of capitalism; it is also a market economy where goods are produced to be sold. In fact, capitalism can be defined as a system where all the elements of production, including in particular the human ability to work (labour power), are bought and sold, which only becomes general once the direct producers have been separated from the means of production, whether land or machines. This didn’t come about suddenly in one go; it developed over time. Historically, the world market – as an inter-national market – first came into being in the 16th century and then market relations spread internally within countries producing for it as there were put change the more they got involved in it. Those in control of political power in these countries faced a choice: either to try to resist the changes or to encourage them. The “European elites” were divided over the issue. Those in favour of change wanted to remove all the barriers to property ownership and production for the market inherited from feudalism. They were, or represented, the up-and-coming bourgeoisie. In the end, they got their way, especially after they won control of political power in the English Revolution in the 17th century and the American and French Revolutions in the 18th century. Whether or not they envisaged a system of production based on wage-labour eventually emerging, they were consciously aiming at the spread of market relations and of the concept of the individual free to enter into market relations with other individuals. See, for instance, C. P. Macpherson’s The Theory of Possessive Individualism, Karl Polyani’s The Great Transformation and John Gray’s more recent False Dawn. Adam Smith, the father of “Political Economy”, writing in 1776, held a labour theory of value and already recognised landless and machine-less wage workers as one of the three economic classes, alongside landowners and profit-seeking tenant farmers, involved in the market economy which it advocated should be extended.

3. Are we still “wage slaves” or are we becoming “debt peons”? This is the basic disagreement between David Graeber and us. A “debt peon” would be somebody forced to work to repay a debt, normally to their employer or landlord. This has existed historically under non-industrial conditions and still survives in some parts of the world though declining. Modern advocates of this view see people in the industrialised and urbanised parts of the world as being essentially in the same situation as they have to work to repay loans with interest to the banks who have lent them money. In other words, that they are being exploited by the banks and bankers. Is this an accurate, empirical analysis? We don’t think so.

For a start, even if you are in debt (and not everybody is, by any means) you are still obliged unless you are a rich investor (which most people aren’t) to work for a living by selling your ability to work for a wage or salary. This is still the basic situation for most people, including those in debt. The disposable income of those in debt may be reduced by having to repay a bank debt with interest, but the main source of that income is still wages.

David Graeber says that “a far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce” and asks “where does that profit really come from?” Good question. It won’t be from the interest paid by workers on money they have borrowed. Some firms in the FIRE sector will be making a profit out of this, but most of the profits of this sector will have come from elsewhere. Since profits are a claim on wealth, and since wealth can only be produced by humans applying their physical and mental energies to materials that originally came from nature, this source can only be the labour of those working in the productive sector of the economy. In other words, out of the surplus value produced by wage-labour. (In fact even the interest paid by workers out of their wages will come out of their share of newly-produced wealth). So, the extraction of surplus value from productive wage-labour is still the basis of capitalism and the ultimate source of all profits. – Editors.

So They Say: Light the Blue Paper and Retire (1973)

The So They Say Column from the December 1973 issue of the Socialist Standard

Light the Blue Paper and Retire

When war broke out in the Middle East, the leaders of the Great Powers all spoke of “deep regret”. Newspapermen enlarged on the horror and futility of it. In the Sunday Mirror on 15th October Jon Akass wrote:

A pity, really, that technology is not yet up to bringing the smell of war to our living-rooms, because that would finally remove whatever romance is left in human combat . . . The best that Israel can hope for is that the Syrian army will be eliminated and the Egyptian army in Sinai routed. And perhaps another year or two of peace. It will not be enough for the price that will have been paid in blood.

It was as if sons of a good home had been caught housebreaking, to their parents’ grief. But on 16th October The Guardian gave an account of the military background.

The Israeli air force was then [in 1967] predominantly French until De Gaulle placed his embargo on the Mirages. President Johnson supplied the first Skyhawks and Phantoms to Israel in 1968 but the bulk of the $1,000 millions of arms sales to Israel since the June, 1967 war was made by the Nixon Administration.

. . . [The Soviets] arms shipments were designed to enable Egypt and Syria to do exactly what they have done in the last nine days, which is to defend themselves against Israeli air power while making limited incursions into occupied territory.

So the sorrowful parents are shown as a Fagin family — teaching the art, supplying the tools, and then lamenting the consequences. Capitalism calls this hypocrisy “diplomacy”.

Lord God of Property

Talking of hypocrisy, the Church of England springs to mind. Its finances were reviewed in the Business section of The Observer on 4th October, with two writers advising how the Church Commissioners’ “£600 million-plus assets” might produce a higher income. Their chief criticism was of the Commissioners’ unadventurousness in holding on to house-property with a relatively low return:

Margaretta Terrace, SW3, provides a good example. This street contains about 40 houses, with an average rent of around £1,000 a year: as the houses are worth a minimum of £40,000—and probably much more—the ‘true’ yield is thus only 2.5 per cent.

Their suggestion was to sell, and to require a down payment of £5,000:

The balance of the consideration would take the form of a 25 or 30-year mortgage: and, at the current mortgage rate of 11 per cent, the Commissioners would receive £154,000 a year.

Eye of a Good-Sized Needle

The Church Commissioners have had this sort of advice before and — no doubt for equally sound business reasons — chosen not to follow it. But an interesting question is raised here. “The current mortgage rate of 11 per cent” has taken on the status of a social problem in recent months. Its rise to that figure was a financial vicious circle: to get more money to lend, the building societies had to offer higher rates to investors, which meant charging a higher rate to borrowers.

But the Church Commissioners do not have that problem. Selling the houses in question, they would not be advancing money but simply taking deferred payments. Using the Observer calculations, if they charged a mortgage rate of only 6 per cent, they would receive £84,000 a year from those houses — which is still more than twice as much as they are said to be getting now in rents. The Commissioners would not only do what the writers want them to do, i.e. make more money; they would be Giving a Christian lead to the Nation, etc.

Is it likely that they will? No. It will not enter the Commissioners’ heads, any more than it did the Observer writers’. As the Good Book says: “Where a man’s treasure is, there shall his heart also be.”

Beggars Cannot be Choosers

And talking of borrowing money. Newspapers have given a good deal of publicity to the Consumer Credit Bill published on 2nd November. It is designed to check “abuses” in hire-purchase, moneylending, second mortgages, and so on. The provision which was asked for most persistently is the one requiring that borrowers shall be told clearly what they are letting themselves in for:

Borrowers required to put up their homes as security for loans and those who obtain loans by mail order will have to be informed of their right to back out before finally signing the loan agreement; and all borrowers will have to be given a copy of every agreement they sign.

(Observer, 4th November)

The Observer writer on "Family Finance”, Paul Wilson, thinks this is inadequate:

Why not lay down a formula by which loan interest rates are calculated, so that all advertised rates are comparable? Why not define what constitutes an extortionate rate of interest, so consumers will know when they have cause for complaint?

This talk is as fatuous as the Bill itself. People go to moneylenders and second-mortgage companies when they have no alternative, and therefore no choice but to accept the terms whatever they are. Can you imagine a loan company’s client, with creditors breathing down his neck, exercising his “right to back out”? Every rate of interest is extortionate. The only way to end problems like this is to get ride of capitalism and, with it, money.

What Makes Great Men ?

People, particularly those who think themselves mentally superior, are often reluctant to accept our contention that intelligence is a social concept. The acclaimed genius of one set of circumstances can be the blithering idiot of another: it depends what society is looking for.

There is an example in the balance at present. Harold Bate is a retired engineer who runs a car on methane gas made from pig and chicken manure. He has done it for seventeen years, and has occasionally appeared in newspapers and on TV as a comical curiosity. Now, suddenly, it is being taken seriously and he has had to take production to a Walsall firm. The Sunday Express on 4th November reported his growth:

“At the moment I am receiving around 150 orders a day from the US and Canada. They are coming in shoals from all sorts of sources—even oil companies. Two major American oil companies—I agreed at their request not to name them—have already used my conversion kit to convert a fleet of oil delivery tankers to run on gas."

Is Harold Bate a genius or a crank? We have yet to learn. What will decide is the world fuel situation. If there is a world shortage of oil, he may well go down with Edison and Stephenson and his story be told to every schoolchild. If it doesn’t happen, he will have been nobody of note.

Gaiété Mancunienne

The magazine calls her Marie-Helena. a model born in Lyons and now living in Paris. But Paula, on a commerce course at school, lives with her parents in a council house at Wythenshawe, Manchester.

(News of the World, 14th October)

The magazine is Men Only. The cream-bun fantasies it sells cannot be set in Manchester or anywhere else the readers may actually live. How sad.

Robert Barltrop

A Look Round. (1906)

From the May 1906 issue of the Socialist Standard

Last month the “Progressive” London County Council took over the tramways of the North Metropolitan Company and immediately signalised the march of “progress” by withdrawing a privilege that passengers had hitherto enjoyed.

o o o

Under the Company management two-journey tickets were issued at the rate of three-fourths of two “all-the-way” fares. The return portion of the ticket was available by any route at any time ; but, so soon as ownership and control by the public capitalists was substituted for that of the private ones, notices were exhibited in each car stating that these would be available on the day of issue only.

o o o

Such is the “progressive” policy of Messrs. Benn, Crooks, Burns, Isaac Mitchell & Co.

o o o

Eastwood & Co. have introduced a new process of making bricks at their works at Conyer, near Sittingbourne, by which bricks of good quality are now turned out by machinery in seven days, against three months under the old hand-made process.

o o o

There are “reformers” who, amongst other wild ideas, propose to solve the “problem” of the unemployed by a revival and extension of the apprenticeship system. By it, for example, they would increase the number of expert brick-makers, and then, even before then—along comes a machine which does all their work in one-thirteenth of the time !

o o o

Some people would argue that it would be better to put aside the machine and make the bricks by hand ; but these are usually people who have never made nor attempted to make any bricks. They are not Socialists. Socialists are working for the elimination of waste, for the greatest economy in the production and distribution of wealth. The difference between Socialism and Capitalism as regards machinery is that under Socialism machinery will be a real labour saver, reducing the hours of necessary work of all the wealth producers in the community, whilst under Capitalism machinery simply reduces the wages bill of the capitalist and intensities the unemployed question.

o o o

It is not, of course, wise to dogmatise as to the extent of the reduction of hours of labour that will be effected by the industrial organisation that will obtain under Socialism, but it is easy to see that when all useless occupations, such as those which are the necessary concomitants of the competitive system, are eliminated, and those engaged therein are performing their share of the useful labour ; when those who are now chronically unemployed or are in the ranks of the predatory professionals (or should it be the professional predatorists ?) are also helping, what an enormous reduction of each worker’s hours will be possible.

o o o

It is sometimes suggested that people under Socialism, having reduced the necessary labour to a minimum, will not know what to do with themselves in the leisure hours. It doesn’t strike me that way. In the summer time, at any rate, I can always enjoy a “laze,” stretched with my “back-to-the-land” by the side of a stream or the sea, and if I were living under a Socialist State, and had done my fair share of the necessary work, I don’t think time would hang very heavily on my hands. I have yet to learn that I am constituted much differently to other folk.

o o o

A book which is often mentioned when discussions arise concerning the hours of labour under Socialism is “Our National Resources and how they are wasted.” It was written by William Hoyle and published in 1871. The writer said (page 50), “Assuming every person did their share, a total of 1¼ hours’ daily labour would suffice to supply us in abundance with all the comforts of life.” He added, “The progress of invention and the increasing application of machinery, are daily reducing even this amount of labour, so that the part which has now mainly to be played by man is simply to superintend the machinery which does the work.” That was nearly 40 years ago.

o o o

Speaking of Wm. Hoyle reminds me of the shock which the rabid teetotallers have recently received. They glibly assert that “drink is the chief cause of crime,” and that “drink fills our prisons,” etc. Dr. Emile Keich has proved, by quotations from the United States Census Report on Crime, Pauperism, and Benevolence, that total abstainers committed more crimes than drunkards, and now we have a Special Correspondent of The Tribune declaring that, as a result of his investigations at Dartmoor, “the bulk of these specialists in crime, who represent the Genius of Evil, are confirmed teetotallers.”

o o o

Farther than this, the Daily News, the anti-alcohol, pro-cocoa, organ, last week reviewed the Criminal Statistics for England and Wales in 1904 and said, “Summarising the results, drunkenness is regarded as stationary, but minor offences of dishonesty and serious frauds and breaches of trust have increased, while offences of the vagrancy class are declared to be growing rapidly.” And if “drink fills our lunatic asylums” how is it that the consumption has seriously declined in recent years, but the number of lunatics has considerably increased ?

o o o

“The deepest root of the evils and iniquities which fill the industrial world is … the subjection of labour to capital and the enormous share which the possessors of the instruments of industry are able to take from the produce.” J. S. Mill.

o o o

Those who think that imprisonment for debt is one of the barbarisms of the past may be interested in the fact that 19,217 debtors went to prison in 1904, the figures for the four previous years being 17,598, 15,710, 13,635, and 12,875 respectively.

o o o

The recent earthquake and resulting fires in San Francisco have considerably affected the shares of many British and German Fire Insurance Companies. In these countries, as well as in America and others, the workers are exhorted to “support home industries,” “keep the money in the country,” etc. But these considerations do not weigh with the employing class. They know no lines of demarcation, whether geographical, national, or racial. And American capitalists are quite as willing to pay premiums to British Insurance Companies when it suits their purpose as British ones are to invest in industrial concerns abroad to compete against British productions.

o o o

But the fact that a seismic upheaval, as the “penny-a-liners” have it, occurring miles away, has caused the price of certain British shares to considerably decline on the London Stock Exchange, has a greater interest for the working class than at first sight appears. It shows the internationalism of capitalism.

o o o

This has of course been shown before. When Mr. Joseph Leiter was operating in Chicago with the object of cornering the world’s wheat supply, the price of wheat, flour, and bread rose, not only in America, but all over the civilized world, and in Southern Europe starving workers who were parading the streets unable to obtain bread, because of the prohibitive prices, were shot down by the national defenders of international capitalism. This was dealt with in detail in the article “Invasion or Starvation,” which appeared in the Socialist Standard in July last.

o o o

Capitalism has long since ceased to be local and national. It is international. The workers are hoodwinked by the capitalist class and their henchmen into thinking that workmen of other districts, of other countries, of other races, are their enemies. But the capitalists draw no distinction. They set out to exploit the working class irrespective of race, creed, or colour. They organise, but as a class against the working-class. The working class have not yet learned the lesson placed before them by their masters.

o o o

It is to the capitalists’ interests that the workers should be disunited, but that if organised they should be organised sectionally, even to the extent of workers in different departments of the same industry forming separate Unions and often blacklegging each other. This suits the so-called Labour Leader as well as the employing class. The more Unions the more jobs, the more joint conferences with the employers, and the more drawings of expenses by the “representatives of the men,” etc. And when some Trade Unionist arises to urge that so many Unions are inadvisable and prejudicial to the workers’ interest, that they involve more paid ollicials than are really necessary and are used by the capitalist class against each other, the “leaders” always find insurmountable difficulties against amalgamation, and if something must be done, they effect a Federation, and create some more well-paid jobs for their own kidney.

o o o

The “General Federation of Trade Unions” job will be fresh in the minds of most readers.

o o o

There is no hope for the workers until they became class-conscious, that is, until they recognise that their interests, like their masters’, are not sectional, trade, or national, but class, and that they must organise, as a class, as the international proletariat, “to the end” in the words of our Declaration of Principles,* “that a speedy termination may be wrought to the system which deprives them of the fruits of their labour and that poverty may give place to comfort, privilege to equality, and slavery to freedom.”

o o o

Writing in the Labour Leader the Gateshead I.L.P. express the opinion “that the reason that Socialism is not making the progress we have a right to expect is largely to be found in the matter served up to their audiences by our I.L.P. Lecturers.”

o o o

Truth will sometimes out ! If the I.L.P. lecturers were Socialists, intent upon imparting to the working class a clear understanding of the principles of Socialism, the matter served up would be different. But, as we have proved, to go no further back than the General Election, the I.L.P. leaders threw over their principles when they found that if they adhered to them they would fail to reach the above-all-things coveted seat in the House of Commons.

o o o

“Thank God,” writes the editor of the Labour Leader, “we are not logicians.” Thank God, say we, we are guiltless of laying that charge to their door.

o o o

In the course of the recent action for slander brought by Mr. J. Pitt Hardacre against Mr. Joseph Beavor Williams, a Labour member of the Manchester City Council, and prominent by his connection with the Musicians’ Union, the defendant admitted that when addressing meetings at Openshaw, in Manchester, he had not confined himself strictly to the truth.

o o o

It will go hard with lying labour “leaders” when the workers get hold of the truth !

J. Kay

These Foolish Things: They call it efficiency (1996)

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

They call it efficiency

Railtrack, the owner of the track the country's trains run on, is busily getting into the privatised spirit by closing 62 signal boxes and axing 217 jobs. The jobs will go through natural wastage, as if that does not really count. Naturally the company is anxious to assure travellers that the cuts will not affect safety, implying that the surplus boxes were merely ornaments among the trackside furniture. Having fewer signal boxes, we are told, will give signalmen ‘a broader picture of the traffic on their line’. Financial Mail on Sunday, 4 August.

We call it murder

The collision on Thursday killed one woman passenger and injured 68 others . . . Despite concerns among senior staff, neither BR nor the network’s current owner, Railtrack, attempted to deal with the risk at the track junction on the line between London and Milton Keynes . . . Despite concerns, the potential risk was increased when the signalling was updated to a more sophisticated computer- controlled system four years ago .. . The enquiry into the Clapham rail disaster in December 1988, which killed 35, recommended the [Automatic Train Protection] device be installed all trains. But the scheme was shelved on cost grounds. Mail on Sunday, 11 August.

You pays your money . . .

One in eight buses and coaches examined by the Vehicle Inspectorate in roadside checks over the past year were defective. Some were so dangerous they were impounded, while in other cases the operators were given deadlines for repairs. Figures released by the Vehicle Inspectorate reveal an increase of 600 faulty buses and coaches over the year, bringing the annual nation-wide total to 4,338. Mail on Sunday, 4 August.

Real education!

Such is the importance of taking responsibility for one’s own financial future that the [Weinberg Committee) report is asking the government to consider making personal finance a core subject on the National Curriculum. Besides the stock market, Sir Mark envisages teaching in the use of credit cards, handling debt and using a bank account. This, the committee argues, is the only way of educating youngsters to cope with the steady whittling away of the welfare state.

Lacking education?

Jailing fine defaulters:

• Unpaid fines [in Britain) total £200 million, £31 million is written off each year.
• In 1994, 22,469 men and 1,454 women were jailed for non-payment—the highest number for ten years and accounting for more than a quarter of all new prison receptions. Each was inside for an average of seven days.
• Three quarters are unemployed and half had other outstanding debts, usually electricity, gas, telephone or council, tax. Two thirds had been in prison before.
• Most men had been convicted of motoring offences. A third of the women had been convicted of prostitution. Guardian, 11 July.

That’s the spirit!

“As managing director at Tarmac during the 1980s I used to dream about doing my competitors in. And as MD of British Telecom I dreamed of doing Bryan Carlsberg in. I will not describe the methods used.” Graeme Odgers, Chairman of Monopolies and Mergers Commission.

The Scavenger

Voice From The Back: Capitalism in action (2010)

The Voice From The Back Column from the October 2010 issue of the Socialist Standard

Capitalism in action

Capitalism is a very wasteful society. When fruit growers have a more than bumper crop it is common to let some of it rot unpicked. When charities ask for the surplus they are told that to give it away would lower the price. These charities at present pay for the crop that is picked. Here is a recent example of this madness in the retail clothing trade. “High Street retailer Primark has been criticised by charities for its policy of shredding damaged and unwanted clothes. Aid organisations have described the practice as “worrying” and “a shame” – saying items could be used to raise vital funds. Primark said the practice was common and was to protect consumers.” (BBC News, 13 September) Overlooking the hypocrisy of Primark’s “to protect consumers” remark, the purpose of all production inside capitalism is to sell goods in order to realise a profit. Capitalism isn’t interested in protecting consumers or aiding charities. Fruit can rot while people go hungry and clothing can be destroyed while people go about ill-clad. That is how the capitalist system operates.

Modernity, but at an awful cost

The advance of capitalism has led to many improvements in technology. None of us would like to imagine a world without mobile phones, computers or digital cameras, but this being capitalism such advances have led to social disaster for some. A major source of the essential ingredients for such technology is the Democratic Republic of Congo. It is from here that gold, tin, tungsten and tantalum originate. It is also from here that we have had the deadliest conflict since the Second World War with an estimated death rate of 5.4 million people. “International agencies have described how paramilitary groups in the region control many of the mine producing gold and the “3Ts” where locals including children are forced to work for as little as $1 a day. The same groups then help to smuggle the minerals out of the country, where they eventually end up in laptops, mobile phones and video game consoles.” (Times,18 August) When The Times investigators queried the supply of such materials with industrial giants such as Apple, Sony, Noika, Dell, HP and Nintendo they were very evasive, best summed up by Microsoft’s reply “It’s very hard to reliably trace metals to mine of origin.” It is of course even harder for them to let their rivals have exclusive access to these cheap sources.

Business is booming

It is common nowadays to read of growing unemployment, businesses folding and widespread bankruptcy ,but there is one trade that is booming . “Pawnbrokers will soon be as common on the high street as coffee shops and banks, according to the chief executive of Britain’s biggest operator. John Nichols, of H&T, said eventually there would be pawnbrokers in every town centre.” (Times, 25 August) His forecast was made as his firm announced a 71 per cent leap in its profits over the last six months. It is worthwhile noting what the source of this high street boom is put down to. “Slightly more than half of pawnshop customers use the cash to pay for daily essentials, such as food and groceries, while about six out of ten are not in work, according to Bristol University research released yesterday.” (Times, 25 August) Some of us are forced to pawn our sweetheart’s engagement ring in order to get some groceries. Isn’t capitalism wonderful?

The Price of Oil

We are often told by social commentators that capitalism with its wonderful technology and scientific endeavours has made the modern world a vast improvement on the past, but the human cost in injury and death is always soft-pedalled by capitalism’s supporters. Almost unnoticed in the paeans of praise for the profit system is this short news item. “Employers in the offshore oil and gas industry were urged yesterday to improve their safety record after a big increase in the number of workers killed or seriously injured. The Health and Safety Executive said that 17 workers died in off-shore-related incidents and there were 50 severe injuries in the past year, a “stark reminder” of the hazards. The combined fatal and severe injury rate almost doubled, coupled with a “marked rise” in the number of hydrocarbon releases – regarded as potential precursors to a major incident.” (Times, 25 August) When it comes to profit making human life is not a major factor.

A Nice Little Run-around

From time to time that old banger that you called the family car needs renewal. Here is an idea. “Lotus has unveiled the ultimate track-day car – a Formula One-inspired racer called the Type 125. The British sports car company will show its consumer-focused F1 clone at this weekend’s annual Pebble Beach Concourse d’Elegance in the United States, with plans to build only 25 examples from next April. The 125 will cost much less than a real Formula One car but the price tag is still expected to be about $1.1 million.” (Drive, 11 August) C’mon what is holding you back?

The New GDP: Gilts, Debts and ‘PIIGS’ (2010)

From the October 2010 issue of the Socialist Standard

During 2010 the most talked-about consequence of the housing and banking crisis has been its knock-on effect for governments – those charged with masterminding the bailout. We examine the state of what is euphemistically known as the ‘public finances’.

There are ultimately only three sources of revenue for any government – taxes, borrowing and printing money. The economic crisis has led to a media preoccupation with all three. Because of the bailout of the banks and massive financial stimulus programmes initiated by governments the world over in an attempt to avoid another Great Depression, there is quite some interest in how all this is going to be paid for.

One aspect of this, which the Cameron government is now grappling with, is to try to compensate for the bailout and the costs of the recession by reducing other government expenditure (e.g. on state-provided services like education, on defence, and on staffing in the civil service, etc). However, if printing money causes inflation, and there are limits to the amount that can be raised through taxes, why not just borrow more to avoid the need for big public spending cuts?

The borrowing option is very often there, but government borrowing is not always as straight forward and risk-free an exercise within capitalism as it may appear at first sight.

Good as gilts

Governments borrow money through the issuance of bonds, which are sold to investors with the promise to pay a rate of interest and – usually – to return the original capital advanced by the investor at a pre-determined time (when the bond ‘matures’). The issuance of debt in the UK is overseen by an agency of HM Treasury called the Debt Management Office. Bonds issued with maturities of less than a year in the UK are called Treasury Bills and are traded on the money markets, typically by big financial institutions who only want to tie-up some of their money for short periods. However, the vast bulk of the bonds issued in the UK to finance government debt are for maturities over a year and are called ‘gilt-edged securities’ because the original bond certificates had a gilt-edge to the paper.

Gilts are usually issued for £100 each but come in various types and maturities – which means that the issuing and paying back of government debt is a far from straightforward business. The defining features of a conventional gilt are its ‘coupon’ (the interest payment) and its maturity, both reflected in the name of the gilt e.g. 8% Treasury 2013, a gilt which pays 8 per cent a year – in other words £8 – and for which the government will pay back the initial £100 in 2013.

Other gilts are ‘index-linked’ in that the coupon and final repayment amount are linked to movements in the Retail Price Index, while another category are undated or ‘irredeemable’ gilts such as 4% Consols, gilts often originally issued in the nineteenth century and which pay a regular coupon but for which the government is not bound to pay back the original sum advanced at any set date. The vast majority – nearly three-quarters – of UK gilts in issuance today are of the conventional variety and these are clustered into ‘shorts’ of under seven years maturity, ‘mediums’ of seven to 15 years and ‘longs’ of over 15 years.

The issuance of gilts, as they are commonly called, is a regular activity because government revenue from taxation does not neatly match patterns of government expenditure, either because spending is running ahead of government revenues, as at present, or because tax-collection typically has greater seasonal variations than government spending. And even when governments might be paying back some gilts as they mature (‘redeeming’ them) they will usually still be issuing others.

Other countries have similar mechanisms for issuing debt (in the US the bonds are called ‘Treasuries’) and all have similar issues at root. In particular, the laws of supply and demand will affect the level of the interest payments demanded by investors as will the general level of confidence in a country’s ability to pay both the coupons and the original capital advanced when the bonds mature. In the UK there are usually weekly gilt auctions and the government will have to respond to a lack of demand for gilts by increasing the coupon on new issues thereby making them more attractive – but at the same time making them more expensive from the government’s own point of view.

A big influencing factor on this is the ‘secondary market’ for already existing gilts – the billions of pounds of gilts in circulation until they mature do not usually trade at their face value after they have been issued, but at rates determined by the market. For instance, the return investors want on long-dated gilts may rise to 5% (the interest payment in relation to the price paid is called the ‘running yield’). If so, this means that a long-dated gilt with a 4% coupon is not going to trade at the original £100 face value it was sold at but only at £80 instead, as this is what would give a 5% running yield (a gilt costing £80 which pays £4 on the coupon). This type of shift in price and yield opens up the possibility for investors of capital gains and losses, and also leads to the concept known as the ‘redemption yield’, the running yield investors achieve adjusted for such capital gains and losses. In its simplest form, buying above the initial £100 face value will give a redemption yield lower than the gilt’s coupon rate as there will eventually be a capital loss to be taken into account, buying below face value will increase the redemption yield above the coupon rate as there will be a capital gain when the government repays the face value of the gilt.

Such market gyrations in gilt prices and yields as determined by capitalist investors daily will influence the way and cost at which a government can borrow by issuing new gilts, with shifts in yields being crucial. Because investors may be tying their money up for long periods it is normal for the yield on long-term bonds to be generally higher than for short-term bonds too. However, periods of financial uncertainty and likely recession usually lead to interest rates being temporarily higher for shorts than for longs as investors do not want to tie their money up for extended periods. This leads to what is called an ‘inverted yield curve’, with higher short-term interest rates in the economy than long-term rates, as happened for a time at the start of the credit crunch  (the yield curve is the relation between interest rates, i.e. the cost of borrowing, and the time maturity of debt).

These ever-changing market interest rates at which governments have to issue gilts in order to finance their borrowings is of obvious concern to them. But the maturity of the bonds is a significant issue too.

‘PIIGS’ at the trough

In the last few months a new acronym has arisen in the financial press reflecting the times. Instead of the talk being of the fast-growing emerging market ‘BRIC’ countries of Brazil, Russia, India and China, we have the ‘PIIGS’ instead. These are countries that have been deemed by the international bond markets to have issues regarding the amount and/or nature of the government debt they have outstanding, the unfortunate acronym standing for Portugal, Italy, Ireland, Greece and Spain. The most serious situation, now accompanied by massive government spending cuts and riots on the streets, has been that encountered by Greece, which has implemented austerity measures of around 30 billion euros in return for a 110 billion euro rescue package from the EU.

Interestingly, Greece’s annual budget deficit – its annual expenditure over its annual revenue – is projected to amount to about 8 per cent of GDP this year, actually less than the US’s 11 per cent (Financial Times, 23 June). And its total accumulated national debt built up over time is, at around 110 per cent of one year’s GDP, a lot less than Japan’s at 190 per cent of GDP. The problem, however, with Greece has been that much of its debt was due to be retired in the next couple of years (i.e. a large proportion of the bonds it had issued were due to mature) and there was no guarantee it had the money to be able to do this. This prospect sent the bond markets into fright to the extent that long-dated Greek debt was yielding over 10 per cent at one stage, more than double that typical for other western economies. This was because investors dumped their bonds, in the belief they may not get their original investment back, sending the prices of the bonds plummeting and their yields soaring.

This has been a clear example of the way in which the bond markets are able to determine which countries are able to carry on issuing debt investors are willing to buy, and which countries investors have lost confidence in. This is precisely what has happened to a number of Latin American states such as Argentina during the last 30 years too – and the retribution has usually been severe. When a country shows signs that it cannot pay back its debts or may default on coupon payments on its bonds, a restructuring programme initiated by the International Monetary Fund is not far away, typically leading to cuts in state spending coupled with tax rises and the inevitable social unrest.

Once a government defaults on its debts, the bond markets tend to have long memories, and the fear of future default will push up interest rates (yields) for years to come, making the cost of government borrowing high. In such situations, international investors retreat to ‘safe havens’ like the US and UK, countries that have never had any significant default on their debts during their history.

Just like BP?

In this respect, the markets treat countries and their governments rather like they treat individual companies. Just as credit rating agencies like Moody’s or Fitch  give credit ratings to companies (the highest being ‘Triple A’) so they rate nations too and this influences market perceptions. Credit rating agencies and other financial firms view companies likely to default on their debt (whether to banks, or to investors such as the owners of corporate bonds) with the utmost suspicion. Defaulting on debt or inability to pay coupon payments on bonds or on promised dividends is one of the greatest corporate sins and companies deemed at risk of default have their bonds rated as ‘junk’ and are punished by markets.

Recent examples of those falling foul of financial markets because of a perceived inability to service their debts would not only include the banks but also major companies like William Hill and Premier Foods which have had to go back to their shareholders cap-in-hand asking for money to reduce their debt and shore up their balance sheets. Yet, a company like BP can have a temporary dip in its share price but otherwise largely escape the type of battering from the markets meted out to others despite its involvement in one of the biggest and costliest environmental disasters of all time. And the reason . . . ? BP’s net debt is little over one year’s typical profits (last year being $20 billion) and it has a flexible debt structure.  In other words, it is highly cash generative, has headroom on its debt and so investors have more confidence it can meet its financial obligations.

Little headroom

Like companies, some countries have more headroom to tackle their financial situation than others. Where confidence in government finances are high and where debt servicing is manageable, governments will be able to issue bonds at rates that are not exorbitant and thereby finance their expenditure. This also applies to governments that have more headroom to increase taxes because state spending in the economy is lower (another reason why the US and UK have been seen as safer havens for bond investors than countries like Greece).

But in truth there is an historical element to this as well. The story of the last 20 years or so isn’t that there has been a massive explosion in government debt – the explosion in debt has been in personal debt. In the US this rose from 80 per cent of average disposable income in 1990 to over 140 per cent, and in the UK a similar measure of personal debt rose from 100 per cent to 170 per cent of household income under New Labour (Financial Times, 9 August 2008). By contrast, while government deficits in a given year are now significant (a record £159 billion or 11.4 per cent of GDP last year in the UK) and have caused some market wobbles, the accumulated national debts of most countries have not been particularly high by historic standards.

Because of inflation over time, the big number headline figures of billions and trillions are misleading, and percentages give the best picture. By way of example, total accumulated national debt as a percentage of one year’s GDP is currently around 70 per cent in the UK. According to figures from the Bank of England this compares with over 250 per cent in 1946 at the end of the Second World War. Indeed, for all the period from the start of the First World War in 1914 until the early 1960s it was far higher than it is now, and the situation in the US has been very similar in percentage terms. Indeed, only as recently as 10-15 years ago governments in the US and UK were running big budget surpluses when the economy was booming and were paying back the national debt as quickly as they could, reducing national debt to GDP ratios to well below 50 per cent in both countries for a while.

What this means practically is that it usually tends to be sudden upward changes in the rate and nature of government debt that tends to really spook markets, drain them of confidence and lead to the type of government austerity measures we are now seeing, rather than particular total levels of debt as such. Indeed, a comparatively healthy economy like Singapore’s has a national debt equivalent to 113 per cent of GDP, while – perhaps counter-intuitively – Uganda, Iran and Mozambique have national debt of less than 20 per cent of GDP. After myriad failed government stimulus programmes over the last two decades Japan has accumulated the second highest national debt to GDP ratio in the entire world (after Zimbabwe) but despite its ongoing problems has comparatively little difficulty borrowing funds via the bond markets.

You can’t buck the market

What is certain from all this is that governments are far more like companies than they would ever generally like to admit, and certainly cannot ‘buck the markets’ and market perceptions, which are always crucial. But then again, who are ‘the markets’ anyway?

The market for UK gilts is typical and is dominated (at around 40 per cent) by insurance companies and domestic pension funds, followed by overseas investors and financial institutions, hedge funds, etc (at 35 per cent). The rest is made up of recognised collective investment vehicles like unit trusts, by banks and lastly by households (households being less than 3 per cent of the total). In other words, the bond markets – like the equity, commodity and currency markets – are dominated by the big capitalists and institutional investors. Their flows of investment capital are substantial and cross national boundaries at the press of a button. These are the people always on the look out for gilt-edged opportunities in life. The laws of the market economy dictate that no government will – or can – argue with them for long.

DAP

Voice From The Back: Statistics (2004)

The Voice From The Back Column from the July 2004 issue of the Socialist Standard

Statistics

From an American learned journal Mental Health Journal of the Berkshires (Spring 2004) comes an interesting review of James Gillespie’s book Preventing Violence (published by Thames and Hudson). Dr Gilligan is a trained psychoanalyst who has worked in the Massachusetts prison mental health system interviewing violent inmates, for 25 years. “Unemployment breeds both poverty and shame . . . and as Gilligan reports, for every one percent increase in unemployment, there is a 6 percent increase in violence. Statistics show the US has the greatest gap between rich and poor of any of the developed countries: the richest 225 families have $1 trillion (that is 1,000 billion dollars!), equal to the total wealth of 47 percent of the world.”

Debtors

“Personal debt is about to break through the £1 trillion ceiling in the UK for the first time, realising the worst fears of consumer bodies. The Bank of England said yesterday that UK mortgage lending increased by a record £9.8bn in April, leading City economists to predict that total outstanding debt would breach the thousand billion pound threshold” Herald (3 June). Behind these cold facts and figures lie the reality of many men and women of the working class living with anxiety and fear. Wasn’t capitalism supposed to lead to happiness and prosperity? So why in such a wonderful world do so many men and women of the working class find themselves in a desperate debt situation?  

 

Students

Capitalism is a very competitive society. It sets capitalist against capitalist, hence war. It sets worker against capitalist, hence strikes and lock-outs. It sets worker against worker, hence nationalism and racialism. There is another aspect of competition that effects young workers. Trying to convince potential employers that they are better material for exploitation than their rivals has led to some workers doping themselves up. “The number of teenagers relying on drugs such as Prozac to see them through GSCEs and A-levels has soared with prescriptions reaching 140,000 in less than a decade . . . The statistics – from the government’s watchdog, the MHRA – also highlight the pressure being put on students by the exam system. They say how that in 1995, 46,000 anti-depressants prescriptions were given to teenagers between 16 and 18 in full-time education. By last year this had risen to 140,000, more than treble the amount” Observer (6 June).

 

Death of a nobody

That capitalism is a cruel and uncaring society was well illustrated by a news item in the Times (11 June) reporting the death of a Japanese worker in his Tokyo flat. ”Only one thing distinguished it from hundreds of other lonely deaths that occur in Japan every year – the dead man’s body was two decades old. The newspaper by his side was dated February 20, 1984. In a busy residential district of the world’s biggest city, he had lain undisturbed and unidentified for 20 years.”

 

Nice for some

“Millionaires around the world saw their ranks swell to 7.7 million last year as economic growth quickened and stock markets recovered. The world’s wealthiest people were worth an estimated £15.8 trillion in 2003, with their riches forecast to grow, according to an investment bank survey known as the World Wealth Report” Herald (16 June)

Ball and chain (2023)

From the January 2023 issue of the Socialist Standard

Voice From The Back: Recruiting Sergeant (2007)

The Voice From The Back Column from the October 2007 issue of the Socialist Standard

Recruiting Sergeant

“Bored with life on his family’s South Carolina horse farm, Willard McCormick decided that military service was the right plan for his future. And when the Army dangled its new, $20,000 recruiting bonus in front of him, the decision got a lot easier. ‘I wasn’t going to go right away, but I heard about the bonus and decided to jump on it,’ McCormick, 19, said a couple of days after signing up. … Since the bonus was unveiled in July, more than 6,200 recruits have signed up to begin basic training before Oct. 1, a move that boosts end-of-fiscal year recruiting numbers, Army officials said. ‘People are calling here saying $20,000 is more than they’ve made in the past two years,’ said Staff Sgt. Brent Feltner, 27, commander of a strip-mall recruiting station in this central South Carolina town . . .The Army’s offer stands out to many in a state where the unemployment level is fourth highest in the country, at 5.9 percent in July, up from 5.5 percent in June. It was 6.2 percent in July a year ago.” (Yahoo News, 1 September) Poverty is still capitalism’s most successful recruiting agent.

Ain’t Science Wonderful? 

“Benefit claimants and job seekers could be forced to take lie detector tests as early as next year after an early review of a pilot scheme exposed 126 benefit cheats in just three months, saving one local authority £110,000 . . . The technology is being tested on people claiming housing or council tax benefit but will be extended at Harrow Job centre for other benefits this year . . . Experts in America, where the most comprehensive scrutiny of the technology has taken place, warn that the technology is far from failsafe. David Ashe, chief deputy of the Virginia Board for Professional and Occupational Regulation, said, ‘The experience of being tested, or of claiming a benefit and being told that your voice is being checked for lies, is inherently stressful. Lie detector tests have a tendency to pass people for whom deception is a way of life and fail those who are scrupulously honest.’” (Observer, 2 September) We wonder if it would be possible to ask members of the capitalist class if they think they deserve their immense wealth while others starve, but what would be the point as the expert said there is a tendency to pass those “for whom deception is a way of life”.

Bitter Medicine

A recent review of the business world and ethics was somewhat critical of the pharmaceutical industry. “There has been a number of scandals including the disastrous ‘Elephant Men’ trial for new drug TGN 1412, which caused massive immune reactions in six healthy volunteers. TeGenero, the firm that developed the drug, went bust after the catastrophe. GlaxoSmithKline has been embroiled in a scandal over anti-depressant Seroxat: it has been accused of hiding critical data showing the drug is linked to suicide in teenagers. GSK has also seen millions of sales wiped out after its Avandia diabetes treatment was linked to increased risk of heart attack and strokes.” (Observer, 2 September) The truth is of course that capitalist business practice has nothing to do with ethics and everything to do with profits.

Class Divided Britain

Anyone with any doubts about the class division in Britain today should look at the following. “Britain may appear to be a richer country than a decade ago but the gap between the rich and poor has reached levels not seen for more than 40 years. The highest earners are being dubbed ‘the new Victorians’ as they take an ever-greater slice of the wealth pie, leaving mere employees and white-collar workers sharing the crumbs. Government statistics show that the richest 10 per cent of the population control more than half the wealth (53 per cent) of the country, with the 1 per cent jet-set elite controlling no less than 21 per cent.” (Independent, 2 September)

Expert Wants Revolution

“A revolution of society on a scale never witnessed in peacetime is needed if climate change is to be tackled successfully, the head of a major business grouping has warned. Bjorn Stigson, the head of the Geneva-based World Business Council for Sustainable Development (WBCSD), predicted governments would be unable to reach agreement on a framework for reducing carbon emissions at either a US-sponsored meeting in Washington later this month or at a United Nations climate summit in Indonesia in December.” (Financial Times, 7 September) Mr Stigson may be on to something important here. Because capitalism pollutes and destroys the planet maybe we need a revolution – a complete transformation of society.

Debt-Laden Workers

Behind all the advertiser’s glib spiels about the consumer satisfaction of buy, buy, buy lurks the nasty reality that many workers find themselves in a nightmare of debt. “Record numbers are visiting the Citizens Advice Bureau because their finances have spiralled out of control. Debt is the most common reason for attending a CAB, overtaking benefit problems. The charity said it had seen a 20 per cent rise in those struggling with borrowing, handling 1.7 million cases last year. Debt accounts for one in three of inquiries at the CAB, with advisers in England and Wales dealing with more than 6,6000 such problems every working day.” (Daily Telegraph, 12 September)

Loads Of Money

Millions of workers survive on less than $5 a day. What a contrast with these parasites: “What price exclusivity? If you ask Lamborghini, one million euros ($1.4 million) should do it — before tax, of course. In a bid to add more prestige to what it already has, the Italian maker of super luxury sports car unveiled the Reventon at Frankfurt’s international auto-show, a very limited edition car that looks more like an arrow than anything on four wheels. With the six-figure price tag, it is the most expensive car that it has ever built. Needless to say, Lamborghini has already sold the 20 cars that it plans to build. ‘As soon as the word got out, we sold out in four days,’ Chief Executive Stephan Winkelmann told Reuters, adding that they could have easily sold another 20.” (Yahoo News, 12 September)

American “prosperity” (1999)

From the March 1999 issue of the Socialist Standard

Are most Americans prosperous? Are they “middle class”? Is the United States “a nation of shareholders”? Do most Americans actually have a stake in the country?

Despite popular belief, most Americans—members of the working class—are not rich; and, over the last ten years, their living standards have deteriorated quite dramatically. John Schmitt, economist with the Economic Policy Institute in Washington DC, writing in the Guardian (18 January) exposes the myth of American prosperity. For example, he mentions that despite the hype, most Americans do not own any shares:

“According to most recent available data from the Federal Reserve, 60 percent of households in 1995 did not own shares, directly or indirectly, including the US equivalent of unit trusts and pension funds. Many of those who do own shares own very few.”

About 72 percent of American households had direct or indirect ownership, or holdings, worth less than 5,000 dollars. During the 1980s, shareholdings rose quite dramatically, but from very low levels. Professor Edward Wolff has suggested that between 1989 and 1997, shareholdings more than doubled; but “the typical US household held only $7,800 in all forms of investment. And in 1997, the top one percent owned shares worth $2.5 million, while the next nine percent held shares valued at $275,000”. However, a typical household’s assets (such as the house in which they lived, and its contents) were worth about $90,000.

Against this Schmitt notes that:

“Debt levels have rocketed. Between 1989 and 1997 the typical household’s debts rose $8,200, after adjusting for inflation. The increase in debt exceeded the total value of the same household’s shares at the end of the period.”

Furthermore, against the apparent assets of many American workers, their liabilities in the form of mortgages on houses and apartments, car loans and numerous credit card debts, demonstrate that they are not only largely propertyless in the means of living, but are permanently in debt. With the recent crisis in world capitalism, and its increasing effect in North America, the situation for most American workers may well get worse in the near future.

Prosperous they ain’t!

Peter E. Newell