The Invisible Doctrine (2024)

Book Review from the October 2024 issue of the Socialist Standard

The Invisible Doctrine: The Secret History of Neoliberalism (& How It Came to Control Your Life). By George Monbiot & Peter Hutchison (Allen Lane)

This small book embraces some pretty big ideas, of interest to socialists. It’s a collaboration between US radical filmmaker Peter Hutchison (whose past work ranges from Iron Man to the Noam Chomsky documentary Requiem for the American Dream) and journalist George Monbiot. Monbiot’s trajectory is also of interest for socialists. From run-of-the-mill environmental reform campaigner in the 1990s his writings over the last 20 years detail a growing revolutionary political consciousness.

The objective of the book is to shed light on the significant political changes – ‘capitalism on steroids’ as the authors put it – that have occurred in the last 50 years and understand the extent to which these are predictable consequences of a concerted ideological offensive by the ruling class.

The book traces the intellectual origins of neoliberalism back to Hayek and von Mises. These ideas (privatization, cut taxes, deregulation etc) originally confined to academia were nurtured, funded and propagated by US business interests. (Monbiot has previously done much to shed light on the murky business origins of all the impressive-sounding institutes, thinktanks and lobbyists that actively try and manage political debate).

The authors make an attempt to argue that neoliberalism is distinct from classical laissez-faire liberalism, in that it emphasizes economic freedoms but pays less attention to the philosophical liberties of the individual that are usually bundled in. Adam Smith may have felt it necessary to expound on the benefits to society of the ‘invisible hand’; in contrast neoliberals don’t really care what the consequences are – the free market is the objective. For our part we have to be hopeful that workers increasingly see an invisible hand that gives them a very visible ‘two-fingers’. I’m not sure whether neoliberalism merits its own chapter in any political history of exploitation and oppression, but socialists would perhaps see it as a more honest philosophical rationale for capitalism. Either way the authors don’t get lost in the angels-on-pins philosophy, and are pretty explicit: ‘Neoliberalism is class war’.

The authors argue that neoliberalism’s disdain for anything beyond the market means that democracy is being degraded globally. We used to be told that capitalism and democracy were ideologically intertwined in a glorious revolutionary project. That was nonsense of course (the vote was just a necessary concession made by capitalists to keep workers on-side) but nevertheless democracy is a pretty heavyweight argument, one worth trying to have on your side. Harder to argue though in an era when free-market ideology appears to travel hand-in-hand with openly authoritarian demagogues; the recent Elon Musk/Donald Trump interview is a clear example (but perhaps not so much ‘hand-in-hand‘ as just two hours of mutual rimming – apologies to Socialist Standard readers for the mental image invoked).

World socialists are arguably unique as a political movement in how explicit we are in our confidence in the capacity of our species to understand the world we live in (given a chance) and act in our collective interests to create a democratic, participative and conscious revolution. We are therefore very interested in the spread of political ideas, including pro-capitalist ones. The ideas of von Mises and Hayek have clearly had impact. It helps to have a billionaires’ blank cheque of course, but the story of neoliberalism lends strength to the argument that ideas, particularly if they can be framed in a coherent narrative, actually matter. The unopposed march of neoliberal ideas has partly been because the left has been unable to adequately create its own narrative. World socialists would argue that this is because so much of the left are in denial; deep-down they are actually wedded to capitalism.

Many supposedly ‘anti-capitalist’ books end with a whimper as the author provides a list of reforms, a mild wish list. Monbiot and Hutchison end their book more substantially, suggesting the potential for some sort of alternative narrative, a ‘politics of belonging’. This involves acknowledging the remaining non-market commons around us that we share, and interesting concepts such as private sufficiency/public luxury are discussed that should be of interest to world socialists. There are glimpses of how this may be pre-figured and developed within the capitalist state (a contentious point for most world socialists) but don’t let this put you off. In the final chapter the authors make a strong and refreshing argument, that every world socialist will echo, against reformism:

‘Far from being a shortcut to the change we want to see, it is the morass into which ambition sinks. System change as the neoliberals and the new demagogues have proven is, and has always been, the only fast and effective means of transformation’.

Brian Gardner

The End — or the Beginning? (1995)

From the September 1995 issue of the Socialist Standard

Socialism is dead! So say all the capitalist political pundits. Yet not one of them is able to point to a single example of how the late 'communism' of Russia and the 'socialism' of the Labour Party differs (or has ever differed) in any essential detail from the private capitalism they extol.

At the beginning of the present decade a new sense of optimism was being promoted by the politicians and the media throughout Europe and the United States. The “evil empire”, as some western politicians referred to the authoritarian state-capitalist tyranny in Russia and her satellites states, was rapidly disintegrating, ending, it was hoped, decades of fear and terror.

Western propagandists insisted that what the world was witnessing was the death agonies of socialism. They were persisting in the lie that Socialism or Communism—which terms describe the system of democratic political and social equality envisaged by Marx and the pioneers of the Socialist movement—was the rotten political corpse that was decaying in Moscow.

Even when western correspondents, like the BBC’s John Simpson, were directly drawing attention to the riches and dissolute life-styles of the Russian ruling class and contrasting this with the misery and impoverishment of the Russian workers, they were using the lie that Russia was communist, that it was the result of a contradiction-in-terms known as “Marxist-Leninism” and that there could be such a thing as a “Marxist government”—the latter being the terminology laid down as policy by the World Service of the BBC.

It was a time for euphoria among the capitalist class and their political agents, many of whom, it has to be said, were ignorant enough to believe their own propaganda that communism had died by its own hand in Russia. Theirs, they believed, was the victory; henceforth the world—including the huge potential market and the teeming natural resources of the vast “Soviet” territories—was their oyster.

More good news

There was more good news, too, for those capitalists and their political agents who saw capitalism as being best served by governments that interfered as little as possible in its workings. In the early days of capitalism the rapacity and sheer social irresponsibility of this school of economic thought had existed political opposition from the working class and die labour unions. On die continent political parties opposed to non-interference by government in the affairs of capitalism (the policy of laissez-faire as it was known) surfaced towards the end of the last century. In Britain the Labour Party came into existence in 1906.

Before die turn of the century, some of the continental parties paid lip-service to Socialism but, despite claim and counterclaim, none of these political parties advocated the abolition of capitalism with its wages and money systems in favour of a Socialist system firmly rooted in common ownership, democratic control and production solely for use. To a greater or lesser extent, the economic philosophy of these organisations was directed at amending capitalism by intervening in its administration in the belief that the grosser aspects of poverty, such as social destitution, unemployment and slums, could be planned out of the system. Henceforth, in those states of capitalism where political democracy prevailed, the political struggle was between die Left and the Right and the substance of their political conflict concerned only the view of each as to the role government should play in the administration of capitalism.

But in the post-war period the lines between Left and Right became blurred and sometimes even obscured. The belief prevailed in both camps that the interventionist doctrines of John Maynard Keynes could be used as the means of ironing out the traditional boom-slump syndrome of capitalism. The economic experts believed they had discovered a new means of controlling the system, a means that would enable governments to check capitalism’s periodic crises. Problems like acute unemployment could be planned out of the system and this would provide revenue, through increased production and greater productivity, to establish schemes of social welfare that would themselves have a beneficial effect on the economy.

That the experts and the politicians of the Left and the Right were wrong is a matter of historical record. Initially, making good the destruction and scarcities caused by the war convinced the Keynesian faithful that their system of “demand management” was really working but inevitably the crises of capitalism recurred: unemployment grew steadily, tax revenue fell as unemployment and other social security benefits soared. Government were forced not only to increase taxation but to debase the currency by printing money to meet demands on the Exchequer.

The result was spiralling inflation which became a post-war economic phenomenon. It provided an excuse, albeit a false one, for the increases in unemployment and it led to strenuous demands by the agents and servants of capital for public spending cuts which meant systematically reducing welfare and health benefits.

Left goes right

The entire political philosophy of the Left was being debunked. On the Right, the concept of a compassionate capitalism which had proved a vote-winner became political anathema. “Trickle down economics”, as the academic harlots of American capitalism euphemistically dubbed the return to the old forms of financial barbarism, became the new buzz-phrase. Its implications were simple enough: if government allowed capitalism to accelerate the rate of exploitation, through cheap labour and the abolition of those benefits which unions had won for their members, then the capitalists’ appetite would be so satiated with profits that more crumbs would be allowed to fall down to the workers. Thatcher and her gross political playmates called it monetarism but one of its first earnest practitioners was Dennis Healey, the last Labour Chancellor of the Exchequer in Britain.

The Left had to face facts; where capitalism had to meet high on-costs resulting from taxation and ancillary benefits to its workforce, it was less able to compete, especially against the dynamic low-waged economies of its newly-emerged competitors. “Less able” effectively means loss of orders, increased unemployment and reduced social services.

In the past, when, for example, Labour was in office in Britain, governments attempted, with limited success, to curb wage increases in order to make British capitalism more competitive. Despite wage “freezes”, “compacts” and legislative restrictions on pay increases, every single Labour government in Britain, and most elsewhere, left office with more people unemployed than there had been under the previous administration.

The knowledge that a government cannot legislate rules of civilised behaviour for its national segment of world capitalism is now well-known to serious politicians on the Left. That is why Labour and social democratic parties have largely abandoned policies of nationalisation and other forms of state interventionism and now openly contend with the Right on the straightforward basis of their alleged better abilities to run capitalism than their opponents.

The end of history

That knowledge formed part of the back ground to the demise of state capitalism in the East, where wasteful, low-productive employment was a general substitute for the dole. Now it seemed that on all fronts capitalism stood victorious. Its eastern competitor, with its frightening military capacity, was dismantling its massive structures of state control of industry and commerce while, elsewhere, the more venial Left was defeated and where it retained a measure of political influence (as in France) it did so by openly espousing free market policies.

Some of capitalism’s secular saints, its pensioned “experts” and visionless “philosophers” were quick to assure their masters that we had reached the end of history. Henceforth capitalism would be inviolable, its tenure unbroken and unchallenged by any alternative form of social order. Communism, the legend ran, had been tried and failed; Socialism had been tried and failed. The fools fell victims to their own ignorance.

That humanity should face an endless future of unbridled greed, competition and conflict must strike terror in the minds of the working class in general and young people and parents in particular. One has only to look at the emaciation of the unions, the change in labour practices from jobs to contracts and the implications of more generalised part-time wage-slavery to see part of capitalism’s vision for the future of the working class.

End of an era

Socialism, or Communism—the two terms mean the same thing—defines a social order in which the resources of the Earth and the tools of production and distribution are owned in common by the entire human family. It means human beings co-operatively and democratically using these means to produce and distribute all the needs of society. It means people contributing their skills and energies voluntarily to the productive and distributive processes and taking from the store of commonly-owned wealth the goods and services they need without any form of payment whatsoever.

Not only has this form of free, classless, wageless, moneyless and stateless society never been tried anywhere, it obviously could only exist on a world-wide basis. So what is the corpse over which the ghouls of capitalism sing their paean of exultation if it is not Socialism?

The ghost that now rots in the cesspit of history is that of the dream that capitalism could be made less gross, less brutal, less rapacious, less wasteful of human life if it could be rationally controlled by governments. We have to allow that good men and women entertained that dream; that they strove to make it reality and that they failed. Today the vultures that inherited their cause, the Blairs and company, are without a dream beyond their personal placement in capitalism’s pecking order.

The nightmare continues without the illusionary dream; history has not ended but that phase which entertained the futile hope that a system based on the exploitation of the working class could function in the interests of that class is gone. It has cleared the way for the struggle for Socialism.

Richard Montague

Contradictions of capitalism (1990)

From the September 1990 issue of the Socialist Standard

Defenders of the capitalist class, noticeably those from the Institute of Economic Affairs and the Adam Smith Institute, have recently been rather vocal in claiming that commodity production—buying and selling and the market—represent the climax of human economic development and in asserting the uselessness of anyone seeking to establish an alternative social system.

This confident bravado coincides with the collapse of state capitalist dictatorships in central Europe. Confusing nationalisation and state planning with socialism, these ideologists present capitalism, particularly the private form they favour, as a “rational” system effortlessly drifting towards some kind of free market Utopia in which every facet of the social world will be reduced to a commodity relationship. Some even suggest that governments and their economic advisers possess the necessary management skills to avert economic problems, while politicians, journalists and academics tell us in unison to be satisfied with our lot and to realise we are living in the best of all possible worlds.

This form of blinkered conservatism miserably fails to understand the workings of capitalism and the array of contradictions to be found within commodity production and distribution.

Economic crises

Despite the political rhetoric, for the governments and the economists who frame their policy documents there remains the uncomfortable fact that the economic and social problems which are features of capitalism cannot simply be wished away. Take for example economic crises and trade depressions which express all the contradictions of commodity production and highlight the anarchy of a system whose sole aim is to produce commodities for a profit.

It was Marx who discovered that crises spring from the very character of capitalism itself. Capitalism produces commodities which have to be exchanged to realise the profit embodied in them and the medium of exchange is money. Yet in this transaction there is an implicit contradiction which Marx expressed in the following way:

No one can sell unless some one else purchases. But no one is forthwith bound to purchase because he has just sold.(Capital. Vol I. chapter 3. section 2a).

Any break in this commodity chain of buying and selling will result in a crisis in which:

The spinner cannot pay because the weaver cannot pay: both of them do not pay the machine manufacturer who does not pay the iron, timber and coal merchant. All these again cannot meet their obligations as they have not realised the value of their commodities . . . and a general crisis thus arises. (Theories of Surplus Value, vol.III pt 2 pp 284-285).

Marx's theoretical explanation of the irrationality and unpredictability of capitalism, and of its crises, small and large, national or global, has been verified empirically, not only during his life-time but afterwards too. We only have to think back to the crisis and resultant trade depression at the end of the 1970s and beginning of the 1980s to see the vindication of Marx over the dreary academic economists and their theories of capitalism as a smooth-running rational system.

Profit before Need

There is currently a slump in the housebuilding industry. Before the crisis there was a feverish boom, with developers building as fast as they could acquire land. Workers within the building industry or related to it were able to gain higher wages, estate agents were snapped up by large corporations with many trading seven days a week, while the Sunday Supplements predicted the boom would last forever.

Then the break in the chain occurred between those buying houses and those selling them. Suddenly developers found they had unsold houses on their hands with interest repayments still outstanding to the banks. Some went bankrupt bringing unemployment and disruption to the lives of their employees. Contractors and building workers found work evaporating, while materials began to stockpile and large distribution companies began to lay off workers. The government and their economic advisers were neither able to predict the depression in house-building nor do anything about it once it had occurred.

This is a classic example of the way under capitalism a contradiction develops between production for profit and social need. Because of the inability to sell houses and realise a profit, house-building is stopped or cut-back while the needs of people for housing are passed over and remain unfulfilled.

This contradiction under capitalism between production for profit and social need takes place in other spheres of commodity production too. Peter Buchanan's 'Open Space' (BBC2 29 May) recently exposed the lie of the consumer fantasy world of the advertisers—the stick which beats the bucket of swill—by showing us homeless men in Cambridge being driven off a skip full of out-of-date supermarket food. There is also capitalism's complete indifference to the needs of 1.8 billion children under the age of 16 in the world to-day. According to a recent report, 61,000 children under the age of 5 die every day in the extreme poverty-stricken areas of the world as a result of preventable diarrhoeal diseases most of which are caused by poor water (Guardian, 25 March). In a rational society producing directly for social need this problem could easily be dealt with through the use of existing technology and of the skills of people working in the field of sanitation engineering. But we don't exist in a rational society: capitalism is perverse and indifferent to anything but the making of profit.

Despite the well-meaning but totally misplaced and ineffective effort of people in charities, the problem of starvation exists side by side with food mountains and deliberate underproduction. Farmers are paid subsidies not to produce and agricultural land is taken out of production to ensure profits are maintained. It would only be someone with a profitable interest in capitalism or someone who had been bought by the capitalist class to produce ruling-class ideas who could ever depict capitalism as "rational" or as a society representing the best of all possible worlds.

To rectify the problems, both social and economic, which affect workers today throughout the world, capitalism has to be abolished and replaced by socialism. To create this new social system of common ownership and democratic control over the means to life in which these problems can be solved and the needs of society met, requires conscious political action by a working class majority. No one else can do it for us. Until we take the necessary steps to capture political power then economic depressions, unemployment poverty and unfulfilled needs will continue: to borrow a phrase from one of Mrs Thatcher s speech writers, "There is no alternative".

Richard Lloyd

The Ire Of The Irate Itinerant (2008)

From the September 2008 issue of the Socialist Standard

The End of the Market (2008)

From the August 2008 issue of the Socialist Standard

Is there an alternative to the market and what is it?

‘The market’ may be taken as a generic term to include markets of all kinds: places (not necessarily physical) in which goods, services and people are bought and sold, offered for sale, rejected or bargained over. Markets imply a medium of exchange, usually money in some form, although barter is a form of exchange without money.

The market system is one way of regulating relations between producers and consumers and between owners of capital and labour. There are in fact three ways of regulating relations between producers and consumers: by the ‘free’ market, by the unfree or controlled market and by no market. These represent market capitalism, state-controlled or ‘command economy’ capitalism, and socialism respectively.

No society has been or is 100 percent free-market capitalist. Every human activity and item of wealth would have to be marketed to make it so. No society has been or is 100 percent state-controlled capitalism. Some private enterprise or free marketing was always allowed or even encouraged in so-called communist countries. The principle of ‘no market’ means simple giving and taking based on understanding, reasonableness and trust. It is present in some activities and some goods and services in all societies, in domestic and voluntary work, for example. But nowhere (except in small communities) have productive and social relations been dominated by the non-market principles of common ownership and free access. In other words, since the first form or property was introduced in ancient civilisations, some form of class society based on some form of possession and market transactions has always been dominant.

The history of the market would make a fascinating subject for research, but there is no space to go into it here. However, a few words about the relative strength of free-market capitalism and state capitalism during the 20th century may be useful.

State capitalism probably reached its high point with the establishment of the Soviet Union in 1917. Fraudulently using the labels of socialism and communism, the leaders of the Communist Party put as much economic activity as possible, including markets, under the control of the state. Eventually, the controlled, centrally organised, ‘command economy’ form of capitalism proved less efficient than the ‘mixed economy’ form, and now the former Soviet Union countries are as free-market capitalist as most other parts of the world.

In post-war Britain there was a similar reaction against free-market capitalism. Beveridge reorganised poverty in the welfare state. The original National Health Service enabled people to get glasses and false teeth free at the point of consumption. This was hailed as socialism, but again it was a fraud. The best that can be said of such measures is that they were the result of a feeling among supporters of capitalism that it could in some respects be better run by the state intervening on behalf of all capitalists rather than letting uncontrolled market forces produce too much inequality and discontent.

Today free-market capitalism is in the ascendancy around the world, despite all its crises. Not everything is privately owned and bought and sold in a market, but more and more industries and services are being privatised. As compared with a century, or even a decade, ago, what might be called the market for markets has grown enormously. To take just a few examples, labour markets for parliamentary lobbyists, spin doctors and corporate headhunters have developed. Bankruptcy specialists and leisure consultancies are flourishing. Sperm is marketed on the internet. In the information market, business skills video providers rub shoulders with computer dating agencies and weather forecasting bureaux. Genetic testing at a hefty price will tell customers who is the real father of their child. In Japan if your child is short of a grandparent you can go into the market and hire one.

Of course, market penetration, as it is called, is never complete. Much human activity is still outside the market. However, it is not too cynical to say that if a way could be found to bottle the air we breathe, such a market would be created. Domestic work, voluntary work, and serious leisure are largely, but not wholly, outside the market. We still have to buy household cleaning items, but we don’t usually charge for doing the washing up. About one in six people in Britain – more in America – give up some of their spare time to help others voluntarily (though some employees do paid work for voluntary organisations). Serious leisure – regularly getting together with others to pursue common interests for pleasure – is mostly a non-market activity (though some participants have to buy things from the market to pursue their serious leisure).

What are the good things and the bad things about the market system? The good things are said to centre around being able to exchange things, stimulate competition, and produce new goods and services. It is claimed that without a means of exchange, expressing the price at which goods and services are bought and sold, no one would be able to exchange what they had for something they needed. Obviously, within capitalism this is true: without a labour market (free or controlled) no one would be able to sell their labour power and ‘make a living’. But this is only because both capitalists and workers accept that labour is a commodity to be bought by the capitalist class or the state and sold by the worker. If, instead of being in the hands of a small minority, the means of wealth production were common property, then that ‘advantage’ of having a market would disappear. We wouldn’t need to sell our labour power to live, and it wouldn’t be possible for capitalists to buy it and live on the surplus value it creates.

A second supposed advantage of the market system is that it stimulates competition, especially if it is ‘free market’. This means that buyers shop around for what they want (or are persuaded to want) at the cheapest price, while sellers hold out for the highest price. This may sound a good idea if you are deciding which supermarket to shop at for the best bargain, but it’s not so good if you are competing to sell yourself on the labour market. You may get a slightly better wage or salary if you join a union, but there is no guarantee you won’t be ‘priced out of the market’, i.e., sacked and unable to compete successfully for another job.

A third stated advantage of the market system is that a market can be created for almost anything – in theory for everything. Is this such an advantage? As compared with feudalism and early capitalism, late capitalism offers those with money a myriad things to buy – unnecessary things, ludicrous things and sometimes harmful things. A fourth television set for the bathroom, a fashion haircut for the dog, a state-of-the-art security system or weapon to protect yourself against robbers. The worst obscenity is the indifference to real poverty and suffering that the market-mediated pursuit of trivia brings: people worry if they miss an episode of their favourite ‘soap’ while millions in the world starve.

Now for the bad things about the market system. I have already touched on some of these when questioning the good things. The labour market is unlike all other markets in two respects. The owners of labour power have to sell something that is capable of producing more than its own cost. And, by having to sell themselves rather than something they possess, they are at the mercy of the buyer, who can dictate, with the help of the state, not only the terms of the transaction but whether it takes place at all.

Competition is an essential feature of the market system. It rewards winners and penalises losers. Socialists may disagree about whether all competition will disappear in a socialist world (I would personally argue that playing games and sports where there are inconsequential winners and losers can develop skills and be good fun). But the kind of cut-throat competition engendered by capitalism cannot be justified. Making excuses for the excesses of the competitive market system is a kind of Nuremberg defence: ‘I was only carrying out orders given by my customers’. The invisible hand of the market can be a cruel hand, destroying and damaging its victim losers, while enabling its ‘top’ winners to live selfish, pointless and distorted lives.

The waste involved in the market system is tremendous. Think of all the useless and harmful jobs (often dignified by the title of profession or career) that are created. People working in banking, insurance and financial services produce nothing of real value, nothing that a society based on production for need and free access couldn’t happily do without. Commercial advertising uses up far more human and material resources than required to inform people of what is available. The worst example of waste is war and preparation for war. A mind-boggling $1,000,000,000,000 is spent each year on this around the world. Countless deaths and injuries have been caused by weapons used to defend and acquire markets and associated spheres of influence in which the workers of the world have no real interest.

To turn now to the marketless, moneyless world that will replace the capitalist market system. First, the absence of money, though it is certainly a feature of socialist society, is not a defining characteristic of that society. The absence of money is a negative idea. Money will not be needed as a means of earning a living or registering the ownership of capital (incidentally, money may well survive but only in inconsequential money games or historical re-enactments).

The positive definition of socialism is a society in which the means of wealth production and distribution will be commonly owned and democratically controlled in the interest of the whole community. It will only be possible when a majority of people (workers) understand, want and work for such a revolutionary change. They will work, not in a labour market, but to produce goods and services that they and their fellow human beings need.

Marx once said that he didn’t want to write recipes for future cookshops. We can agree with him that we shouldn’t try to draw up blueprints for the details of how to run a socialist world of the future. The people at the time will decide those details. But we ought to be interested in principles, in the ingredients to be used and the social relations to be entered into in future cookshops and other places.

A socialist world will only be possible by people behaving in pro-social ways. We do not ask for a fundamental change in human nature. None is needed. Even today, with the market system dominant and people encouraged to look after themselves first, most men and women behave pro-socially when they see someone in need of help. Market forces are forces alien to the best in human nature (human behaviour would be a better term). The building of the world socialist movement is a task for those not passively submitting to the discipline of the market but able and willing to help create something better for themselves and their fellow humans.

Stan Parker

The explanation of Mr. Enoch Powell (1964)

From the May 1964 issue of the Socialist Standard

For some months Mr. Enoch Powell, who resigned from Macmillan's government in 1958, along with Mr. Thorneycroft, and refused to serve with the present Prime Minister, Sir Alec Home, has enlivened the political scene with periodic outbursts of a kind most embarrassing to his own party. In January he described the policy of trying to check wages, prices and profits as hocus-pocus, and dangerous nonsense. He attacked the National Incomes Commission and National Economic Development Council and declared that their plans won’t work :

We don’t know how to make them work. In fact they can’t work in any society which we are prepared to contemplate.

He ridiculed a pious statement made by employers’ representatives on Neddy about their intention lo keep prices down and told them to get on with their proper job of making as much profit as possible.

Managements have no business to accept any responsibility for prices. The duty of every management is to conduct business in the way which . . . is likely to maximise the return on the capital invested in the business.

In February he fired some more broadsides against too much government interference with the activities of private profit seekers and in April went to Glasgow to denounce government schemes to encourage firms to move into that and other areas where unemployment is above the National average level.

The Guardian on 4th April reported him as openly proclaiming that his Party is the Party of capitalism:

Whatever else the Unionist Party stands for, unless it is the party of free choice, free competition and free enterprise, unless —and I am not afraid of the word—it is the party of capitalism, then it has no function in the contemporary world, then it has nothing to say in modern Britain.

The leaders of the Labour Party, seeing in this something they could use in the forthcoming election, were delighted and hastened to congratulate him on his courage and candour.

In Conservative circles he got no support, except from odd lots such as the City Press. His own colleagues lost no time in repudiating him and deploring his utterances—they too had an eye on the reactions of voters.

Some of them set themselves to explain the man. The Sunday Telegraph called him "a don with a brilliant analytical mind in the best Cambridge tradition," and an advocate of “an intellectualist version of the late Sir Waldron Smithers” the same Waldron Smithers who provided evenings of hilarious entertainment in defending capitalism and the New Testament against the SPGB.

Powell certainly has some qualities which set him above most of his fellow conservatives.

When he has an idea he does not at all mind pursuing it logically to its conclusion no matter how distressing this may be to his party. After he resigned in 1958 he roundly attacked the Keynesian doctrines that have for so long been the fashion not only in Labour and Liberal circles but also among the economists in the Tory Party.

But it is true that he suffers, as one critic said, from a certain political innocence—he does not appreciate that as capitalism depends for its continuance on the deception of working class voters, it is expedient that certain dangerous truths should never be stated by those who do not want to end capitalism.

If Powell’s own statements were lucid and straightforward the reactions to them were remarkable, chiefly for contradiction and confusion. The Labour politicians and Peers seized on them as proof that the Tory Party is opposed to "planning," forgetting that one of his principle criticisms of Macmillan's and Home's policies is that there is too much planning. As recently as November last the Labour Party journal, Socialist Commentary, under the title “All Socialists Now,” instanced the action of the Ministry of Housing in planning a large-scale rebuilding plan for Fulham as proof that “no one can any longer oppose that . . . socialist concept—planning.” It was, however, Mr. Thorneycroft (who had resigned with Powell in 1958, but is now back in office) who made the most curious contribution. Declaring Powell’s view—that “ the Conservative party must offer the capitalist system to the public, or nothing,” Thorneycroft answered that “The Tory party is a great deal bigger than the capitalist system.” 

Logically this is an absurdity. How can the.party which administers capitalism in order to preserve it, be greater than the system itself? Thorneycroft was not being candid. What he really meant, but could not say, is that those whose purpose it is to persuade the workers to go on accepting capitalism knew very well that they cannot do this in the somewhat odious name of capitalism itself, but have succeeded in doing it by calling on the workers to vote for capitalism’s facade, the Tory party and its so-called “Welfare State.”

But this is not peculiar to the Tory party. It covers all the governing parties all over the world and all the Opposition parties straining to replace them and carry on the same function with minor modifications. In spite of a few Enoch Powell’s here and in other countries, capitalism is now administered over most of the earth’s surface in the name of “Socialism.” Attlee, who was Labour Prime Minister from 1945-51 set the pattern. Having written in 1937 that “a Socialist party cannot hope to make a success of administering the capitalist system because it does not believe in it,” he spent six years trying to do just that while pretending to do something else. Stalin, Krushchev, Mao and the rest followed Attlee's example though more blatantly and crudely. Home, like Attlee, cannot prevent those in Britain who know what capitalism is when they see it, from saying so: Krushchev and his like can, so far, prevent the embarrassing fact of the existence of capitalism from being given public utterance.

Edgar Hardcastle

Losers’ World (2000)

Book Review from the April 2000 issue of the Socialist Standard

‘Turbo-Capitalism: Winners and Losers in the Global Economy’, by Edward Luttwak, (Weidenfeld and Nicolson, 1998)

Most American textbooks on capitalism either present it as the best possible system that will last well into the future if not for ever, or admit that it has a few faults which are a small price to pay for its benefits. Luttwak is closer to the second position than the first. In his opening sentence he expresses his belief “both in the virtues of capitalism and in the need to impose some measure of control over its workings”. In a matter-of-fact tone the author discusses the many and dreadful consequences of capitalism for the losers, of which there are many more than winners. By turbo-capitalism he means a form of capitalism that is much different from the controlled form that mostly prevailed from 1945 to the 1980s. He admits that “turbo” is his term—others simply call it the free market. It means very much more than the freedom to buy and sell:

  “What they celebrate, preach and demand is private enterprise liberated from government regulation, unchecked by effective trade unions, unfettered by sentimental concerns over the future of employees or communities, unrestrained by customs barriers or investment restrictions, and molested as little as possible by taxation.”

Luttwak likes the increase in economic growth that turbo-capitalism brings but is aware of the consequences which he deplores:

  a breakdown of familial capitalism (especially in Asia): “Cold-blooded, truly arm’s length and therefore purely contractual relations” 

  increasing job insecurity: “employees at all but the highest levels must go to work each day not knowing if they sill still have their job on the morrow” 

   the global increase in unemployment: “it is a protracted tragedy at the personal level, and destabilising at the social level” 

the insecure majority are persuaded to accept the sovereignty of the market: “losers blame themselves rather than the system”

In mitigation of the harsh discipline and sharp inequalities which Luttwak admits turbo-capitalism has brought, he believes that there are “two great forces that serve to balance its over-powering strength”: the American legal system (poor people can get “damage awards”) and the pervasive influence of Calvinist values (earned wealth is no impediment to virtue).

In Luttwak’s favour is his assessment of Blair and the left wing in politics: ” . . . both Clinton in the United States and Blair in the United Kingdom have continued to use some liberal prose to wrap their conservative remedies . . . even a left-wing electoral victory can yield only right-wing polices”.

Compared to what he calls “defunct communist economies” and “bureaucratic socialism”, the author believes that turbo-capitalism is “materially altogether superior, and morally at least not inferior . . . Yet to accept its empire over every aspect of life, from art to sport in addition to all forms of business, cannot be the culminating achievement of human existence. Turbo-capitalism too, shall pass”.

Yes, Luttwak, but what are you doing to help make it pass?

Stan Parker

Capitalism on Trial? (2012)

From the January 2012 issue of the Socialist Standard

How the BBC rigged capitalism’s acquittal.

Lord Reith, the founder and Director General of the BBC, famously gave the wink that “[the British establishment] know they can trust us not to be really impartial”, a policy that he and his successors have pursued with great consistency ever since.  The BEEB may veer politically a little to the left or to the right, but it never deviates from promoting the interests of the British capitalist class.  Interestingly, though, it has always trusted its highbrow radio stations, Radios 3 and 4, to debate political and economic issues a little more frankly than its mass-market television news programmes. This may be because Radio 3 and 4 listeners are relatively few in number and are assumed to be properly on-message (On profile, they have been through the mill of higher-education and professional training.)  It was no surprise, then, to find that in the summer of last year, Radio 4 put out a two-part series called ‘Capitalism on Trial’ – though the verdict it would deliver was, of course, never in doubt.  

To make the programme, the producers invited a group of professional philosophers, historians, economists and journalists to the studio to deliver their opinions (presumed to be ‘evidence’) on the subject of capitalism.  To these, they added a management consultant and hedge-fund manager, presumably to give what passes on Radio 4 for a “real-world” perspective.  Predictably absent from the discussion was anyone with a view from the sharp-end of capitalism during this time of crisis – anyone, that is, who could have punctured this little Radio 4 bubble of lofty intellectualism in a trice.  If this was a trial, then the jury was rigged, the witnesses carefully ‘vetted’ and the judge nobbled.  The council for the defence (who also happened to be the presenter of the programme) was that well-known and impartial commentator on current affairs, Michael Portillo.

Early in the programme Michael hinted at the purpose behind all this.  “As a former politician,” he said, “I think about whether we can maintain public support for a system that many associate with inequity and unfairness.”  This was the task then: to defend capitalism from its critics and re-establish its credentials in the minds of an increasingly doubtful and hostile public.  How was this to be achieved?  Simply: by sleight of hand, misdirection, omission and fraud.   In Portillo’s final summing up, he announced for instance, that capitalism had been put on trial and “compared to the alternatives, favourably and unfavourably….”   This claim was very revealing.  It was simply false.  No meaningful comparison had been made during the one-and-a-half hours of the series. Like many Radio 4 programmes, the producers and editors had stitched together a series of sound-bite opinions with commentary from the presenter to lull the audience (and possibly those taking part as well) into thinking it all added up to a coherent analysis.  In this rapid jumble of opinions how many actually believed that they had heard capitalism being compared with alternatives, once they had been told they had?

It would have been foolish for the BEEB to deny or skirt round the current recession and national debt kerfuffle.  The programme’s strategy was, therefore, to come clean on the credit crunch and then to try to explain it away.  This, as sometimes happens on talk radio, led to several interesting admissions.  There was an eager and unseemly rush by the contributors to tell us, for example, that capitalism was necessarily a very unequal society.  We learned, in fact, that capitalism needed to create ‘victims’.  We learned that, its economic downturns such as we are currently experiencing, are normal and inevitable. We learned also from one Crispin Odey, a hedge-fund manager who pocketed £23 million by betting on the crisis happening (a small personal detail omitted from the programme) that to function properly, capitalism needs both ‘trust’ and a profitable banking sector, something; he opined that “may not be popular news to the public.” Presumably he perceived a distinction, between “the public” and Radio 4 listeners who were, of course, sophisticated enough to understand his point. Or maybe he didn’t care – you got the feeling at least that when he referred to ‘us’ or ‘we’ he was not talking about you or me.

Despite all this we discovered, that all these unfortunate-sounding features of capitalism were really rather good and necessary things.  Inequality was an excellent motivator, we were told, without which capitalist enterprise could not function.  Downturns in the economy, though inevitable were positively to be welcomed as part of a cycle of “creative destruction.”  And even capitalism’s need to create victims can, fortunately, be legitimised by ensuring that those “who do badly out of it don’t suffer too much” – a great gladness to all those who are currently having to rely on the ‘generosity’ of the state or to keep the landlord at bay.   

We heard further that the credit crunch was not actually capitalism’s fault.  What had happened in 2008 was a “departure” from capitalism; or was an “extreme” or “very dysfunctional” form of it.  Alternatively, the crisis had resulted from the system not living up to its “principles”.  “Capitalism” we heard, “in a very fundamental sense [had] stopped working.”   Voice after voice was raised to assure us that the actions of the bankers were, in some mysterious way, aberrations; that they were somehow not driven by the engine at the heart of capitalism itself: the remorseless pursuit of profit.  No-one raised the possibility that capitalism itself might be dysfunctional.

Some of the most fantastically pixilated opinions came from Jamie Whyte, an extreme free-marketeer, introduced to us by Michael as ‘a philosopher’ but currently working as a management consultancy researcher. Jamie told us with disarming frankness that within capitalism there could be no equal opportunities.  The idea was “nonsensical,” he said, “a myth”.  But then he let us in on a secret.  Though the idea was a myth, it was a most valuable myth, because if you really believed it, it might give you a “good shot at the top [and] increase your chances.”  He didn’t add that, in a competitive world without equality of opportunity, the majority would remain helplessly stuck at “the bottom” whatever they believed.  Nor did he add that such myths delude working people into falsely believing that there is a realistic chance of capitalism fulfilling their social needs, a belief that works much to the benefit of their employers, whose own ample needs are met by the appropriation of wealth created by their employees.  

And the fairy dust just kept on falling…

“Abject poverty is… dreadful”, claimed Jamie, mustering in his voice all the conviction of a telephone answering service.   “And of course one would want to eliminate that.”  (Indeed one would!)  “Capitalism”, he argued, “has proved over the centuries to be the best economic arrangement for getting rid of abject poverty.”  Clearly Jamie’s cloud has not touched earth recently.  He hasn’t been out on the streets of Britain speaking to the increasing number of workers learning to cope with homelessness, or to the women fleeing domestic violence who are being forced, now in significant numbers, onto the streets through hostel closures, or to the rising numbers of those predicted to die this winter because they cannot afford adequately to heat their homes.  What Jamie principally objects to, though, is not abject poverty, but the irritating concept of relative poverty:  “I see [the concept of relative poverty] as a threat to the market mechanism that creates the wealth that stops people actually being materially poor.”  Perhaps someone should tell him that it is not the ‘market mechanism’ that creates wealth but the productive labour of the working class.  

As workers, we have always been patronised by those like Jamie Whyte who embrace a utopian vision of capitalism but who cannot quite grasp the idea that we might aspire to something slightly better than a life of relative poverty (even if, in his view, it is “not bad”).  Some of us might even be attracted by the idea of a life of “equal opportunity” and economic security in which we are able to make a genuine contribution to the world in which we live and have the freedom to make real choices.  

These characters live in an ideal, intellectualised world where economic cycles of boom and bust are “to be welcomed, because in the downturns, bad companies go out of business and entrepreneurs with new ideas take over or elbow aside the weak performers – what some call Creative Destruction.”  In other words, recessions are really just the necessary means by which capitalism cleanses itself of inefficient companies, restores profitability and makes possible the next boom. This is true, and to Michael and Crispin this is an exciting, elegant and intellectually satisfying idea.

To most of us, on the other hand, recessions load our economically insecure lives with ever more pressing problems and threats: loss of livelihood, dignity, home and maybe even family.  At a time when many of us are facing redundancy and there is little on offer but insecure, part-time, low-paid work; when claiming benefits is becoming an increasingly hard and humiliating experience; when many of us are cutting down on basic food items to pay their rising rents; when lives are going down the pan, it is possible that some of us will perhaps fail to appreciate the elegance and regenerative power of “creative destruction”.  We might regard a society which cannot remain efficient except by periodically raising the normal levels of poverty and misery to greater than usual levels as not worth supporting.  We might even be antagonistic to the idea of efficiency when it turns out to mean the efficient exploitation of our own labour.  It might be that we want to turn our backs on capitalism and consider an alternative.

As Michael picked his way among his witnesses’ contributions, introducing and reflecting on them, or ignoring them sometimes when they raised an inconvenient point or two, his line of argument became gradually clearer: it may be that capitalism creates victims; it may actively create inequalities; and it may visit both relative and abject poverty upon working people, but against these minor inconveniences (and many others we could add) there is one outstanding fact: capitalism is the most fantastically successful way of creating wealth humanity has so far evolved.

And we can wholeheartedly agree with this.  But to it we would add that capitalism’s purpose, and only purpose in creating all this wealth is to fill the few but ample pockets of the capitalist class into which much of it flows.  For capitalism creates poverty just as inevitably as it has creates wealth, and the wealth it creates does not drive out poverty but merely towers above it and makes it intolerable. We would also add a certain emphasis to Michael’s claim: that capitalism is the most fantastically successful way of creating wealth humanity has evolved – so far.

As every radio producer knows, a programme’s conclusion is all important because the last thing listeners hear will be the idea they take away with them.  In his summing up, Portillo speaks of capitalism and its current state of contraction: “my guess is that it will emerge, however bedraggled from its battering.  But maybe that’s just because I cannot imagine the alternative.”  And so, finally, we come to the big message, the one that the series has been warming up to.  And this is it: THERE IS NO ALTERNATIVE.  After all the odd and insubstantial claims that capitalism actually does meet our needs, this is the system’s keystone argument.  No wonder, the producers avoided making comparisons.

And it is at this point, too, that we are allowed to see clearly the spectre that has been hovering indistinctly over the programme throughout, the spectre of Karl Marx, whose writings are for the first time in many years showing signs of generating popular interest.   We know that we are about to be warned.

That warning comes in the final contribution from Gareth Stedman Jones, academic and reformed leftist: “…when Marx came to trying to think out how would you have an efficient and productive society without a market this is where I think he got stuck.”  That’s it then: there is really no use in looking for an alternative to capitalism – like it or not, you are stuck with it, chum, because even Marx couldn’t find a way out.  But to socialists listening (those that were still awake by this time) this claim will have come as something of a surprise.  Marx was not foolish enough to try to make detailed predictions of a future society (it is, of course, impossible to predict in detail what any society will look like even a few years ahead, even a capitalist one) but he was far from “stuck” for an explanation.  As a disillusioned Leninist who formerly placed his faith in the very unMarxist Soviet regime, it’s understandable that Gareth Stedman Jones would be unable to admit this.  

Marx, in fact, derived from his analysis of capitalism some definite conclusions.  To be sustainable, a post-capitalist society would need to abolish the source of class conflict: private ownership of the means of production.  Because of this, a post-capitalist world, he argued, would necessarily be classless and stateless.  And without private ownership there could be no money or exchange.  Such a society would also necessarily be global – just as capitalism is now.   

When Portillo and the BBC shut down discussion on an alternative to capitalism, it is worth considering whose interests they are protecting, especially since, by their own admission, we live, at present, in a structurally unequal, victimising world – one incapable of meeting human need.

Hud.

The Magic of the Mad-House (1992)

Illustration by Peter Rigg.

From the November 1992 issue of the Socialist Standard

In the Thatcher years it was "the magic of the market” which served as the Tory mantra. Buy your own home—start your own business—purchase shares—the market rules, OK. But for millions who listened to the bogus magicians it was not to be OK. It was to be less like magic and more like a trick. Homes repossessed: businesses bankrupt; shares having to be sold to pay the debts. The magic of the market was transformed into the misery of uncontrollable, vicious economic forces which are eating away human lives and ridiculing past aspirations.

The lie about the market was not hard to see—if you were not blinded by the prophets of profit. The market was mythologised, turned into a cosy image of friendly producers happily exchanging their wares in the town square. The propaganda of the Eighties tried to make buying sound like some sort of passport to security. They spoke of a "property-owning democracy” and wage slaves were fooled into buying their wafer-thin slice of it. So-called yuppies took huge mortgages, now costing them more than the petty packages of luxury living areas which they had imagined meant success. Unemployed workers were encouraged to borrow in order to set up businesses, the debts of which now mean that for many of them suicide and the receipt of their life insurance pay-outs is the most rational economic option.

In 1992 few speak of the magic of the market. There are the rightwing nutters from the Adam Smith asylum and the Libertarian Alliance—“we demand a free market in drug pushing and a privatised police force”—but these days they have one foot in the Tory research departments and the other in a psychiatrists waiting room.

These days—the days of hopeless disillusion—a new deity has arrived on the scene: The Markets. Switch on the radio and the newsreader will foretell its next divine act. “The Markets are feeling uncertain this morning—The Markets want a cut in interest rates—The Markets are not very pleased with the result of the French referendum—The Markets want more cuts in welfare spending”. It is like a return to Greek drama where huge, invisible entities govern destiny. The day after Major devalued the pound, or, to use the current newspeak, Major allowed the pound to free fall on the Markets, a man on the BBC said that he was uncertain about the future of the British economy, but "it's all in the lap of the gods now—or rather the Markets” (verbatim quote).

So now we have it: who needs Archbishops and Popes when we have thirty year-old stock market analysts with degrees in economic gobbledegook to tell us our fortunes? The same night as the above comment the BBC TV newsreader declared, in exactly these words, that "Industry would like an interest rate cut of at least another one per cent”. Who is Industry? Is it a man. a beast, a gang, a private club? Who are the Markets when they’re at home?

Of one thing we can be sure: the Markets are not the boys and girls in white shirts and braces who run round the Stock Exchange screaming like they’re on drugs. And Industry is not the men and women who are actually involved in industrial production. The workings of capitalism are not about them. These are the makers and counters of profits.

The truth is that nobody controls the Markets. Nobody can. It is beyond the control even of the few who benefit from production for profit. But those for whose advantage all of this market madness is going on are not the wealth-producing majority. The function of the capitalist market is to sell commodities in order to provide rent, interest and profit for the small minority who monopolise the productive resources of society. It is in their interest that the majority must suffer.

Whingeing marketeers
The spectacle of Tory ministers whingeing in parliament about profit-seeking speculators disrupting the economy is truly funny. Capitalism is all about the freedom to seek profits at anybody’s expense. What do the Tories want the capitalists to do? Lose the chance of making a fast buck so that the government will look good? Just as absurd is the Labour Party's claim that given power they could tame the market. Why then have they never left office since 1924 without unemployment being higher than when they were elected? A Smith-Brown government would be just as much at the mercy of the market requirement to produce profits as all earlier ones.

Any government which finds itself in power when capitalism is going through one of its endemic crises, with the need to destroy productive forces in order to restore profits, will have no option but to ride the storm. What is particularly just about the cries of seasickness from the present victims of an exceptionally rough storm is that they were the people whose whole appeal rested upon the endless prosperity and stability which they claimed market forces generate. For many workers “market forces” are a code word for misery. The best response to the sadistic whims of the Market-gods is to send packing the market-loving messiahs and abolish the market by bringing the resources of society into common ownership and democratic control.

A marketless society is the only sane alternative to the mad-house which they call The Economy. Tinkering with it will be of no practical use; it would be like buying a new suit for Frankenstein’s monster and hoping that newly-clothed a monster he will no longer be. The urgent task before us is to unite to take society away from those whose sole intent is to sacrifice needs for profits. Then, once society is in the hands of all of us, we can begin having free and equal access to the available wealth of this abundant planet.

Steve Coleman

Still the State (2014)

Book Review from the May 2014 issue of the Socialist Standard

Dominic Frisby: Life After the State. Unbound.  £9.99.

The best part of this book is the title, and even that is not totally accurate. Frisby in fact advocates capitalism with a much smaller state apparatus than now, combined with a so-called free market, and where the only tax is on land values. In the last few pages he does say he leans towards ‘anarcho-capitalism’ (capitalism with no state at all, supposedly), but he says nothing about how this would work and it is not his main focus, so we will ignore it here.

Frisby’s strategy is to blame nearly all the problems of society on the state. He defines capitalism as a system where prices and a business’s success or failure are determined by the market. What exists now is not real capitalism but something called crony capitalism, where success is determined by the privileges a business is granted by the state, in the form of subsidies, regulation, etc. Mysteriously, this is claimed to have existed only since the days of Thatcher and Reagan. Under crony capitalism, a person who benefits from the privileges granted by governments is a rent-seeker, defined as ‘Somebody who does not himself create new wealth, but appropriates that wealth from other people after it has already been created’. This is not a bad definition of a capitalist, but alas Frisby has no idea that the capitalist class do not themselves produce but exploit the rest of us.

He wants the state to do no more than defend property rights, which means there would still be police and armies. This is what the state exists for now: it is ‘a coercive machine (police, judiciary, armed forces, schools, etc.) for conserving the monopoly by the capitalist class of the wealth taken from the workers in a geographical area’ (www.worldsocialism.org/spgb/education/z-marxism).

The book has many shortcomings, one of which is that often only part of an argument is made. For instance, Frisby does not even try to argue that capitalism was wonderful before its crony variety developed. Further, he begins by discussing Glasgow, once a major port and centre of entrepreneurial activity (in the 18th century it controlled the tobacco trade with the US), and contrasts this with its current situation: high unemployment, low life expectancy, high  murder rate. As with many things, this decline is supposed to have started with the First World War, when the state began to intervene much more in daily life. But he makes no attempt to describe the lives of Glaswegian workers in the 18th and 19th centuries, such as the appalling living and health conditions (life expectancy of 42 years for men and 45 for women in the 1820s, for instance). Of course, acknowledging this would have completely undermined the point he wishes to make.

Frisby claims that capitalism ‘exalts peaceful co-operation between producers and suppliers, without coercion, theft, and rent-seeking’. What is missing from this idyllic picture is the employer, and there can be no co-operation between the capitalist and the workers who are forced to sell their labour power. He sees socialism as involving a big state and high levels of taxation, yet mystifyingly he refers a couple of times to his own system as ‘socialism without the state’.

The book’s general level of reliability is illustrated by its author not even being able to cite the principle ‘From each according to ability, to each according to need’ correctly, mangling it as ‘From each according to their means, to those according to their needs’.

Paul Bennett

A Capitalist Criticises Capitalism (1999)

Book Review from the April 1999 issue of the Socialist Standard

“The global capitalist system . . . is coming apart at the seams”. So declared arch-speculator George Soros before a US congressional enquiry on 19 September last year. He has since expanded on this in a book entitled The Crisis of Global Capitalism. What has he in mind?

By “global capitalist system” Soros doesn’t mean what we would understand by the term, i.e. capitalism as a world-wide system of production for profit, but the more restricted sense of present world financial arrangements which allow the more or less free movement of capital throughout the world:

“The global economy is characterized not only by free trade in goods and services but even more by the free movement of capital. Interest rates, exchange rates, and stock prices in various countries are intimately interrelated, and global financial markets exert tremendous influence on economic conditions. Given the decisive role that international financial capital plays in the fortunes of individual countries, it is not inappropriate to speak of a global capitalist system” (Introduction).

It is these arrangements—this single world financial market—that he is saying is in danger of disintegrating; which of course would not at all be the same thing as the collapse of capitalism that has sometimes been mistakenly predicted by some writers in the Marxist tradition.

Unstable system 

Soros, following, consciously or not, a distinction made by one school of anti-imperialist thinkers in the 1970s and 80s, divides the “global capitalist system” into a centre (US, Western Europe, Japan) and a periphery (Asia, Latin America, Russia, East Europe, Africa). Under this system capital flows from the centre to the periphery and back, supposedly to the mutual benefit of both. He sees the danger of disintegration coming from countries on the periphery taking steps to stop the free flow of capital in a bid to avoid the negative effects of the system’s instability on their economies and populations:

“To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its own interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism” (p. 176).

So what Soros means by the “breakdown” or “disintegration” of global capitalism is not the collapse of the world-wide system of production for profit based on the exploitation of wage labour, but only states coming to adopt measures that impede the free movement of finance capital.

Soros does not believe this to be an inevitable process. As the quote above makes clear, he thinks it can be stopped if appropriate measures are taken at international level; global institutions must be created to lay down some basic ground rules for the operation of global capitalism.

For Soros is no free marketeer. In fact part of his book is a devastating attack on those he calls the “market fundamentalists”, the followers of Von Mises, Von Hayek and others, who advocate that market forces be given complete free rein and who came into intellectual prominence in the time of Reagan and Thatcher. Soros levels two charges at them. First, that they think that markets have an in-built tendency towards creating a stable situation through supply and demand being in balance, while this is not the case. Second, that they preach that the market is the best way to regulate all human activities.

Writing from his own experience, admittedly not of the real economy but only of financial markets, Soros challenges the equilibrium theory:

“Market fundamentalists have a fundamentally flawed conception of how financial markets operate. They believe that financial markets tend towards equilibrium . . . Financial markets are characterized by booms and busts and it is quite amazing that economic theory continues to rely on the concept of equilibrium, which denies the possibility of these phenomena, in face of the evidence. The potential for disequilibrium is inherent in the financial system; it is not just the result of external shocks” (Introduction).

The external shocks which the market fundamentalists invoke are usually, of course, government interventions of one sort or another. According to them, if governments just stood aside and let the magic of the market operate, there would be no slumps just continuous, smooth growth. But there is no evidence for this. Throughout the 19th century British governments pursued a policy of laissez-faire yet slumps still occurred on a regular basis.

The fact is that the market system does have a built-in tendency towards creating booms and busts rather than stability and smooth growth. As Marx pointed out, this applies to the real world of market-oriented production and not just to financial markets. Soros is even prepared to give Marx some credit here:

" . . . the capitalist system by itself shows no tendency toward equilibrium. The owners of capital seek to maximise their profits. Left to their own devices, they would continue to accumulate capital until the situation became unbalanced. Marx and Engels gave a very good analysis of the capitalist system 150 years ago, better in some ways, I must say, than the equilibrium theory of classical economics” (Introduction).

He claims, however, that thanks to “countervailing political interventions in democratic countries” Marx’s “dire predictions did not come true”. This is based on a misunderstanding of Marx’s view. The “dire predictions” that Soros mentions were not, as he seems to assume, that the unregulated profit-seeking of capitalists would lead to the collapse of the capitalist system but simply that their competitive struggle for profits meant that steady, smooth growth was impossible and that growth proceeded by means of booms and slumps.

Capitalism has not collapsed because it was never going to, not because of government intervention Marx didn’t foresee. And government intervention has not been able to eliminate the boom/slump cycle which Marx saw was an unavoidable feature of capitalism.

Creeping marketisation

Soros sees himself as continuing the political philosophy of Karl Popper. As expounded in books such as The Open Society and Its Enemies Popper argued against the idea of trying to establish a “perfect” society in favour of accepting an “open” society as one subject to permanent improvement by piecemeal social engineering, by which he understood capitalism with a political structure involving elected institutions, the rule of law and pluralism, i.e. more or less what the West has had for years.

For Popper the main enemies of his “open society” were the totalitarian ideologies of fascism and “Marxism” (which, for him, was not just Marx’s own views but those mixed up with Lenin’s and Stalin’s). Soros adds a third which he says has come into prominence since the collapse of “communism”: uncontrolled capitalism. Hence the subtitle of his book “Open Society Endangered”, though he had already expressed this view in a famous article “The Capitalist Threat” that first appeared in The Atlantic Monthly in February 1997 and which was widely reproduced.

Soros sees the danger coming from the penetration of market values into all aspects of life, leading to social disintegration. “Monetary values”, he writes, “have usurped the role of intrinsic values and markets have come to dominate areas of society where they do not properly belong” (p. 206). He is in fact quite forceful in his criticism of this aspect of global capitalism:

  “The functions that cannot and should not be governed purely by market forces include many of the most important things in human life, ranging from moral values to family relationships to aesthetic and intellectual achievements. Yet market fundamentalism is constantly attempting to extend its sway into these regions, in a form of ideological imperialism. According to market fundamentalism, all social activities and human interactions should be looked at as transactional, contract-based relationships and valued in terms of a single common denominator, money. Activities should be regulated, as far as possible, by nothing more intrusive than the invisible hand of profit-maximising competition. The incursions of market ideology into fields far outside business and economics are having destructive and demoralizing social effects” (Introduction).
   “A transactional society undermines social values and loosens moral constraints. Social values express a concern for others. They imply that the individual belongs to a community, be it a family, a tribe, a nation, or humankind, whose interests must take precedence over the individual’s self-interests. But a transactional market economy is anything but a community. Everybody must look out for his or her own interests and moral scruples can become an encumbrance in a dog-eat-dog world. In a purely transactional society, people who are not weighed down by any considerations for others can move around more easily and are likely to come out ahead” (p.75).

Soros does not realise just how fundamental a criticism of capitalism this is. Although he rightly says that “a purely transactional society”, in which the only links between people would be monetary, “could never exist”, the market fundamentalists are equally right to insist that the logic of capitalism is to work towards this—they are just crazy in thinking that this nightmare situation is the ideal form of society.

Soros’s mistake is to think that you can have capitalism and somehow keep its money-commodity relations from spreading everywhere. The history of capitalism is the history of the continuous spread of such transactional relationships—i.e., the market—into more and more fields of human activity. It is a process that cannot be stopped within capitalism as growing marketisation is just as much a feature of capitalism as capital accumulation; indeed the two go together.

Soros, however, is a supporter of capitalism:

  “I want to make it clear that I do not want to abolish capitalism. In spite of its shortcomings, it is better than the alternatives. Instead, I want to prevent the global capitalist system from destroying itself” (Introduction).

We doubt whether he has given serious consideration to the alternative of a global society based on the common ownership of the world’s resources and production directly to satisfy human needs. Not that we would really expect him to. Some of his fellow-capitalists already think he has gone too far in his criticism of their system.

Adam Buick

Freedom and speech (1979)

Book Review from the August 1979 issue of the Socialist Standard

Geoffrey Sampson: Liberty and Language. Oxford University Press, £5.75.

Professor Noam Chomsky of the Massachusetts Institute of Technology is the world’s foremost linguist, founder of the revolutionary theory of transformational grammar. He is best known, however, not as a linguist but as a political writer, a powerful critic of the American involvement in Vietnam and advocate of a rather vaguely-described decentralised anarcho-syndicalist society. He sometimes links his linguistic and political views, though rather loosely, the general claim being that the speed and ease with which children learn their native tongue is evidence that they must be born with some innate knowledge of the basic characteristics of language. From this it follows that the mind is not a “clean slate” and that therefore people are not totally malleable, able to have their ideas and behaviour moulded by governments and others.

In this extended critique of Chomsky, believes that the facts of language lead us to adopt a very different kind of political philosophy. He argues that the use of language is creative, in that we can all talk about things and ideas which were once non-existent and indeed unimaginable. He concludes from this that people's minds are creative, and that this is evidence for the political position which he terms liberalism, by which he means the free-enterprise type of capitalism advocated by such as Hayek and Friedman.

In a truly liberal society, as Sampson sees it, the main task of government will be to maintain the free market, the production and distribution of goods being controlled exclusively by the impersonal mechanism of free competition. Any individual should produce goods by whatever method they choose and sell them for whatever price they can get. Those individuals whose enterprise or labour command relatively high prices are to be rewarded proportionately, and the prospect of higher rewards will act as an incentive to innovation and entrepreneurship. A liberal society encourages and rewards unforeseen innovation and is thus uniquely able to harness the potential of the human mind, the creative powers of which are attested by the use of language.

Naive people might object that such a society would give rise to gross inequalities. But this would not count as an objection to Sampson, since he positively glories in privilege and inequality. Here we resort to direct quotation, on the grounds that a mere paraphrase might not be believed:

  What justifies the inequalities of wealth which will exist at any given time in a liberal society is that the total of wealth increases most rapidly in such a society, and that this increase in total wealth benefits those on the lower as well as those on the higher rungs of the economic ladder.

The prospect offered is not so much one of “jam tomorrow” as of jam in two or three generations’ time.

But the fact is that such inequality and poverty are quite unnecessary now, and have been for decades. Technical resources are more than sufficient to provide an abundance for all humanity, and what prevents this happening is precisely the profit motive which Sampson sees as so wonderful. There is a clear distinction between an innovation that will be beneficial to mankind and one that will be profitable. Far from promoting wealth production, the profit motive creates artificial shortages by discouraging production and destroying goods already produced.

Moreover laissez-faire capitalism cannot work in the way Sampson imagines it can. For instance, he believes that a fully liberal society automatically means full employment, though presumably he would hardly claim that anything approaching it has existed in the societies which he secs as close to the liberal ideal, the United States and nineteenth-century Britain. And he ignores all the consequences for the working class of the poverty he so willingly accepts: poorer education, housing and health care, boring and degrading work, total lack of any say in how their lives are organised, insecurity, the danger of wars, and so on. The “liberty” he mentions so often is the liberty of the capitalist class to exploit the workers (who won’t even be allowed to organise trade unions to fight back a bit).

It is clear that Sampson's knowledge of the world outside the confines of his own study is fairly limited. His understanding of Marxism is also abysmal; for one thing, he fails to see that Marx’s theory of increasing misery has to be interpreted in relative not absolute terms. For another, his criticism of the precept "from each according to his ability, to each according to his needs” is on the daft grounds that it is meaningless, since what people need and can produce are themselves facts that emerge only from the “competitive process". But the obvious fact that abilities and needs depend on society (not on competition) in no way impairs the desirability and practicability of this principle.

Sampson never deals with the possibility of socialism, since his “alternative” to liberalism is simply a variant of capitalism, termed “authoritarianism”. This is described as a society where “those who govern" determine production and distribution patterns, rather than the free market. Actually, this is not an alternative to liberalism, but merely a necessary aspect of any capitalist society: even in Sampson’s ideal world, the rich and powerful will determine production patterns when they decide what to produce and how much. Such production decisions have to be made in any society.

So Sampson's defence of capitalism is neither original nor at all convincing. His role as bourgeois ideologist is utterly transparent. In The German Ideology, Marx and Engels refer to the ruling class' “active, conceptive ideologists, who make the perfecting of the illusion of the class about itself their chief source of livelihood.” This describes very nicely the function of Sampson’s arguments, which are a contribution to the way the capitalist class sees itself or would like to see itself. We have quoted above his feeble justification of privilege and poverty, and we can add here his claim that profit is “the reward to the enterpriser for the production of useful economic knowledge”. This phrase is a strong candidate for the Socialist Standard Prize for the silliest remark of 1979. The capitalists love to see themselves as the most intelligent, go-ahead and competent members of society, who have reached their privileged position through their own ability to come out on top in free competition— and more importantly, that is how they want the working class to see them. It is to the perfecting of this illusion—for that is what it clearly is—that Sampson’s pen is dedicated.

The fact that we can all make creative use of language does not justify the existence of oppression and exploitation—and neither does anything else, for they are simply unjustifiable.

Paul Bennett