Editorial: Will America be next? (1998)

Editorial from the October 1998 issue of the Socialist Standard

“Capitalism is falling apart at the seams”—this apocalyptic statement from no other than George Soros, the international financier who broke the pound in 1992. This is a relative piece of honesty from our ruling elite who have so far done their damnedest to play down the severity of the global economic crisis. From the “quality” broadsheets to the television news-you have to look long and hard to find any serious coverage of the most newsworthy story of the day.

South East Asia, Russia and now Latin America are all in trouble and the only thing keeping the world economy going has been the bull market in the US—or so the “experts” tell us. What is interesting is the way each country or region is treated separately from each other as if what we are really facing is an aggregate of “local” problems the sum total of which adds up to a “global” problem. It is precisely this, which makes Soros’s honesty so refreshing yet frightening at the same time.

America, which has been growing for most of this decade is set to slow down. The “new paradigm” theory which argued that the US could grow forever will soon be proved demonstrably false-the only question is to what extent will the US crash?

The US has been attempting to get Japan to reslate its economy because Japan is considered to be the “motor” economy of South East Asia. But as we know Japan’s banking system is very nearly insolvent and its room for manoeuvre is extremely restricted. If the crisis in this region pulls Hong Kong and China down—the US fears that the cheaper exports from a lower exchange rate will put intolerable pressure on the dollar and the already glutted markets of the world will have to deal with even more cheap produce seriously undermining the US balance of payments. Couple this with a financial meltdown, you will have not just the rise of protectionism but a potential global trade war.

Finally, the US dominated IMF has nearly run out of money so its capacity to act as “lender of the last resort” and bail out any more countries is almost at an end. Even if more funds are found to re-capitalise Russia, what about the next time or the time after that? What about if America’s stock market bubble bursts and this leads to what one US economist called “the biggest depression since 1945”! The British and US stock markets have both now fallen about 15 percent in recent weeks. Who could now take a bet on capitalism?

Boom goes bust in Asia (1998)

From the October 1998 issue of the Socialist Standard

Thirty countries covering a quarter of the world’s population are officially in recession. Even defenders of capitalism are now compelled to use the term “world economic crisis”.

It had to happen. Given the chronic state of overcapacity and potential overproduction in relation to the market in all the key sectors of global industry—electronics, computers, vehicle production, pharmaceuticals, shipbuilding, steel—the boom in Asia had to come to an end sooner or later. It already had in Japan, by far the biggest economy in the region and in fact the second biggest in the world after the US. Now the rest of East Asia—Korea, Malaysia, Thailand, Indonesia, Hong Kong and other so-called tiger economies—has followed.

It is difficult to believe that at the beginning of the decade Kinnock, when leader of the Labour Party, went into the 1992 general election holding up the Japanese model of incestuous government-corporation partnership as the way forward for Britain. Those who pointed to the relatively rapid rate of capital accumulation in East Asia to deny the socialist contention that world capitalism has been in a depressive state since the end of the post-war boom in the early 1970s have also had their come-uppance. Marx was right. They were wrong. There can be no such thing as a permanent boom. That’s only a dream peddled by smooth-talking politicians and ageing Keynesian professors.

Marx was right

Marx, the first person to provide a convincing analysis of how the capitalist economic system worked, concluded that, whereas capital accumulation—or economic growth, if you like—was a key feature of capitalism, this did not take place smoothly. Capital accumulation proceeds by fits and starts, periods of relatively rapid growth being followed by periods of contraction and stagnation. The graph of long-term growth under capitalism is not a straight line moving up from left to right but a jagged line with peaks and troughs, with each peak normally higher than the previous one. Marx argued that this cyclical pattern of growth was not just accidental but was inevitable under capitalism—it was the way capitalism functioned and developed, its “law of motion” as he put it—with each period of rapid growth ending in a slump and each slump preparing the conditions for the next round of growth.

The history of capitalism since Marx’s day has amply proved the validity of this analysis. In order to maintain or increase their share of the market and realise the surplus value embodied in their products, capitalist firms are compelled by competition to reduce their costs by improving their productivity, in particular by the introduction of more productive machines. This leads to an increase in overall productive capacity. During the period of recovery that follows a slump this poses no problem as the market is beginning to recover and expand again.

However, as the competitive pressures to increase productive capacity continue, the point is eventually reached when productive capacity in a key industry or group of industries comes to outstrip the market demand for its products. At this point a crisis of overproduction breaks out. As profits fall, production is cut back, workers are laid off and, through the knock-on effect on other industries, the market shrinks, so inaugurating the period of slump. During the slump, the least productive machines are taken out of production and capital is depreciated or simply written off. This purge of under-productive machinery and over-valued capital eventually creates the conditions which allow capitalist growth to recommence, so beginning the boom-slump cycle again.

This is how capitalism has developed and continues to develop, only now that (as Marx foresaw) capitalism is a global system the periods of rapid growth and purging slumps also occur on a world scale. The big slump of the 1930s was a world phenomenon, as was the post-war boom of the 1950s and 1960s which ended in the early 1970s. So of course is the current world economic and financial crisis.

Mad money

Just because the 1930s slump was preceded by the Wall Street Crash of October 1929, some people jump to the conclusion that it is financial crashes that cause slumps. Actually, it’s the other way round: financial crashes usually reflect the situation in the underlying real world of economic activity. Where they occur this is a sign that something has already gone wrong in the real world, that, to be precise, productive capacity and production has come to outstrip market demand or is threatening to. As J. K. Galbraith showed in his book The Great Crash, this is what happened towards the end of the 1920s; when the gamblers on the stock exchange realised that overproduction was occurring they tried to convert their paper wealth into real wealth and provoked a crash. The slump followed but as a result of the preceding overproduction not of the stock market crash, which at most only exacerbated the economic crisis.

It’s the same today in Asia. The financial crisis there is a reflection of the fact that stock exchange and foreign currency gamblers have realised that the countries of East Asia have expanded their productive capacities beyond market demand. This has been obvious for a few years in the case of Japan where overproduction has led to full-scale recession with lay-offs and factory closures. But Korea, Malaysia, Thailand, Indonesia and the others were in the same situation of potential overproduction since a significant part of their growth had been in the same industries which Japan had overexpanded: car and other vehicle production, and electronics and computer hardware.

The reason why governments and central bankers in Europe and North America are so worried about the financial crisis in Asia is that their own real economies are in the same state of potential overproduction as the Asian countries and that this could provoke a financial crash in their countries too. The king is naked here as well.

So far they have managed to avoid this though current indications are not good. Even if these countries avoid a full-scale crash this does not mean that they also have to power to avoid an economic slowdown or downturn. Such slowdowns and downturns can occur without a financial crash. Indeed this to an extent is what has already happened. Since the early 1970s the world economy has been in a period of slow growth, punctuated by falls in production from time to time. This is a reflection of the a lower rate of profit and of the unresolved problem of productive capacity having outstripped market demand in key technologically advanced industries such as aerospace, petrochemicals, pharmaceuticals, and computers.

One consequence of this period of slow growth is that significant amounts of profits are not being reinvested in production but, instead, are being held in liquid form and invested in financial assets with the aim of making as large a short-term profit in as short a time as possible. All the multinational corporations and other big companies now have treasury departments engaged in financial speculation of one form or another whether on the stock exchange, the bond market, currency transactions, commodity markets or dodgy hedges such as derivatives. In France in recent years many major companies have even set up or taken over banks for just this purpose.

This extra demand for financial assets, deriving from non-reinvested profits, has driven up their price, so creating the anomalous situation of a stock exchange boom in what is essentially a depressed economy. Nothing could illustrate more clearly how divorced is the world of finance from the world of reality. Most of the financial transactions that take place on the world scale today are not investments of productive capital—are not used to set up factories or to buy machinery, equipment or raw materials—but are to buy and sell shares or bonds or foreign currencies or commodity futures or property or failing companies to asset strip them.

Such purely financial transactions are utterly unproductive, even from a capitalist point of view. Not only do they not result in the production of a single extra item of wealth but they don’t even increase the amount of surplus value available for sharing amongst the various sections of the capitalist class. It’s a zero-sum game. As socialists have always maintained, stock exchanges are places where capitalists gamble and try to cheat each other with a view to acquiring as large a mass as possible of the surplus value that has already been produced by and robbed from the workforce.

Rising share prices—and despite dramatic falls from time to time, there has been a steady long-term rise in the share price indexes of most stock exchanges—do not represent an increase in real wealth. They merely amount to a rise in the book value of the real wealth-the productive capital of the companies in question-that shares are supposed to represent. It’s a rise in paper values not real value. When a share goes up in price this means that you can get more for it if you sell it. If you don’t sell your shares all it means is that their book value has gone up, but if everybody or even large numbers tried to realise this book value by selling their shares, the real situation would soon reassert itself. The price would fall, bringing down the book value of the corresponding productive capital to its real value.

Is the Big One coming?

Even some supporters of capitalism, among them the arch-speculator George Soros himself, have begun to express concern about where the parasitic and volatile nature of global finance capital may lead the world. At a congressional hearing in Washington on 15 September Soros even spoke of the danger of the “disintegration of the global capitalist system”. We have always been cautious in predicting a 1930s-scale slump, but if even supporters of capitalism are discussing this as a serious possibility who are we to insist that they’re wrong?

One thing is certain, though. Until the problem—for capitalism—of excess productive capacity and potential overproduction in relation to market possibilities is resolved, there can be no return to any period of rapid economic growth as in the post-war boom when growth rates were twice the maximum that has obtained in any of the already industrialised countries since the early 1970s. But the only way this problem can be resolved is by a bigger slump than we have yet seen since the war in which the system would be purged of its excess productive capacity and overvalued capital.

If this does not happen, then global capitalism will continue in its present state of slow growth against a background of high unemployment and declining welfare provisions, staggering on from financial crisis to financial crisis and from mini-boom to mini-slump. Can this really be the end of history?

Adam Buick

Voice From the Back: ‘Son, here’s a million dollars. Don’t lose it.' (1998)

The Voice From The Back Column from the March 1998 issue of the Socialist Standard

Quote

“The best advice I was ever given was on my twenty-first birthday when my father said ‘Son, here’s a million dollars. Don’t lose it.'” Larry Niven.

In God they trust

The world’s second largest chemical, pharmaceutical and genetic engineering conglomerate, with a turnover of more than £60 billion a year, has turned to revivalist religion to rally senior management under pressure from consumers to be socially responsible. Novartis, a recent merger of Ciba-Geigy and Sandoz, which owns, among other things, Ovaltine, has commissioned a corporate hymn called the Science of Life. It includes refrains, hip-hop and rap. Guardian, 13 November.

“Prison works”

One in five prisoners tested positively for drugs during random tests, according to government figures. A total of 13,797 inmates in England and Wales were found to have taken drugs following random tests during 1996-97, junior Home Office minister, George Howarth said in a written Commons reply. Evening Mail, 10 December.

Tell it like it is

Some capitalists understand their system better than others or are more honest about it. George Soros, who made fortunes speculating in currency markets, does not regard capitalism as a stable or self-regulating system. In an interview last year, which has become particularly relevant now, he said: “Markets can move in unexpected ways and become chaotic. I’m afraid that the prevailing view, which is one of extending the market mechanism to all domains, has the potential of destroying society. Unless we review our concept of markets, our understanding of markets, they will collapse, because we are creating global markets, global financial markets, without understanding their true nature. We have this false theory that markets, left to their own devices, tend towards equilibrium.” Speaking of market fluctuations, he said that if they become too large, “you can have breakdown. It will come through political and eventually military events, rather than events merely in the financial markets”.

Owners of property

There are already plans to sell of £1.2 billion of NHS land and buildings in the next five years. Trust currently own £3 billion of land assets and £15 billion of buildings and fittings. Mail on Sunday, 7 December.

The other coffee story

The maker of Nescafé has taken to installing cubicles inside Russian churches from which to deliver congratulatory coffee sets to newlyweds as soon as they walk back down the aisle. Nestlé employees have already presented 17,000 couples with a large jar of instant coffee and two red mugs wishing them “health, happiness and hot love”.

Class conflict direct

Associated British Ports yesterday attempted to deflect shareholder hostility by announcing 150 job cuts designed to reduce costs by £5 million a year. Guardian, 11 December.

Class conflict obscured

Employee share-ownership schemes are taking off again for the first time since the late Eighties. Last week British Airways announced it will extend the scheme it offers UK workers to staff around the world . . . (Financial Mail on Sunday, 18 January). Stuart Bailey, corporate business consultant with Abbey National says . . . “People now see that the aims of workers and shareholders are increasingly similar.”

Honours amongst thieves

For an outspoken republican and a non-Catholic, a papal knighthood must come as a surprise. But media baron Rupert Murdoch is to receive just such an honour from the Pope. The Roman Catholic Archdiocese of Los Angeles announced that the Australian-born mogul will be entitled to style himself a Knight of the Order of St Gregory . . . [A] spokesman for the Archdiocese said Pope John Paul II bestows the title on people of “unblemished character” and those who have “promoted the interests of society, the Church and the Holy See” [including those who have] made large donations to Catholic institutions, according to the announcement in the Los Angeles Times.

Quote

“Confidence is the bedrock of all capitalism.” Peter Morgan, commenting on the South Korean economic crisis on BBC Television News, 23 December.

Radical treatment necessary

In 1872 Engels demonstrated in three articles gathered together under the title The Housing Question that homelessness was an inescapable feature of capitalism. Everywhere in the world, ever since, wherever capitalism has spread, this has proved to be the case. Now, after years of campaigning and collecting, Shelter has announced in recent newspaper advertisements: “The number of homeless families has almost doubled in the last fifteen years . . .” Surely, this is tantamount to saying that the campaign wages by Shelter has been a failure? If a doctor prescribed a treatment for an ailment which, after fifteen years, was twice as bad, most of us would conclude that the treatment was the wrong one.

Too much food

Across Europe last year, fruit growers were paid £132m–£1.1m in Britain—for crops designated as surplus. A 25-year-old regulation specifies that the surplus has to be disposed of through “approved outlets”. Although these can include disposal for animal feed, the EU favours distribution to charities, old people’s homes and schools. It even offers grants to offset any expense incurred in giving the fruit away. Yet when British fruit growers, largely concentrated in the south of England, applied to the government’s Intervention Board to dispose of 2.3 million kg of apples, two million pears and 13.6 million cauliflowers after last year’s bumper harvest, all went into pig’s swill or were spread on farmland as fertiliser. Scotland on Sunday, 16 November.

A Mad Marketeer Regrets (1999)

Book Review from the April 1999 issue of the Socialist Standard

“As it is presently constituted global capitalism is inherently unstable. Unless it is reformed radically, the world economy risks falling apart in a replay, at once tragic and farcical, of the trade wars, competitive devaluations, economic collapses and the political upheavals of the 1930s” writes John Gray, a disillusioned 1980s’ Thatcherite, in a recent book.

Reading anything by John Gray these days is a novel experience. Here we have a former free marketeer who now no longer believes in the neo-liberal utopian project he once advocated. Indeed, Gray appears to be in much of a hurry to atone for his previous intellectual sins by informing us that global capitalism is in deep crisis and headed for a fall of catastrophic proportions.

Undoubtedly, it is this paradox which provides a highly stimulating read when you pick up Gray’s latest book False Dawn—The Delusions of Global Capitalism. However, as in the case of George Soros, Gray does not mean the same as us when he talks about global capitalism. He is referring to the current global financial arrangements—free movement of capital around the world or neo-liberalism.

From the outset we should be clear that Gray is not critiquing capitalism per se, only the US-led neo-liberal project which started a couple of decades ago. For Gray, capitalism is assumed to be an eternal system to which there is no alternative; capitalism therefore, needs to be saved from itself. In this respect, Gray can be seen to be in the long line of reformist defenders of capitalism from Keynes right up to George Soros (who, incidentally, has endorsed Gray’s book).

The basis to Gray’s entire thesis is that the neo-liberal project has its roots in the mid-Victorian laissez-faire experiment which in turn has its roots in eighteenth century Enlightenment rationalism. Gray admirably demonstrates that far from being a natural state of affairs (as marketeers like to think) it was organised by the state centrally. The corollary of this is that regulated markets are natural—though this assumption made by Gray is demonstrably false.  

Gray goes further by arguing that Soviet “Communism” was another “false utopia” stemming from the Enlightenment period. Both projects were “universalisms”, which means they aimed at world domination (from a Western perspective) showing complete disregard for diverse cultural needs and values. Subsequently, this century has been littered with “false utopias” from the Enlightenment—the last of which is the US’s ideological drive to create a global free market. Gray says that, in the case of the Soviet Union, this attempt will end with disastrous consequences for humanity:

 “Even though a global free market cannot be reconciled with any kind of planned economy, what these utopias have in common is more fundamental than their differences. In their cult of reason and efficiency, their ignorance of history and their contempt for the ways of life they consign to poverty or extinction, they embody the same rationalist hubris and cultural imperialism that have marked the central traditions of Enlightenment thinking throughout its history” (p.3).

We shall return to this theme later.

Product of the crisis

Compared to many pro-capitalist commentators, Gray makes a refreshing change. Whereas the majority, even today, try to explain the financial storms in south-east Asia, Latin America and Russia as purely local phenomena (which may or may not add up to a global problem), Gray at least realises that the problem is inherently global.

However, Gray’s position is ultimately superficial and idealist unlike the Marxist method of historical materialism. This said, he expertly surveys the results of neo-liberalism in countries such as Britain, New Zealand and the US and recounts the all too familiar story of rising inequality, welfare cuts, social exclusion, etc. He adds to this the effects on countries such as Mexico, South Korea and Indonesia of the IMF-imposed austerity/free market measures which are presented as a political/economic panacea despite the fact that such measures are “alien” to these particular “capitalisms” and that the effects on ordinary people’s living standards are terrible.

Although he locates the origins of the neo-liberal project with the death of the post-war Keynesian era, Gray singularly fails to set it in its real theoretical context: the crisis of capitalism.

From a Marxian viewpoint, the OPEC crisis of the early 1970s was the beginning of the current crisis. In other words, world capitalism has been in crisis for nearly thirty years and the re-emergence of the New Right can only really be evaluated as a response to the crisis. This period (especially amongst the advanced economies) was characterised not only by stagflation (simultaneous rising unemployment and inflation) but also by often stagnant or falling growth and profit rates, which in the case of Britain culminated in a financial/fiscal crisis requiring an IMF bailout.

This is what really lies behind the “casino” economy or the “globalisation” process today. Since it’s increasingly hard to make sufficient profit making things, i.e. manufacturing, “speculation” has increasingly come to dominate. The crisis we see around us is in fact a crisis of the “real” economy. Gray is blind to this because he explains the crisis as a crisis of an “idea” (neo-liberalism) which could be rectified by a change of policy.

Philosophical error 

This very basic philosophical error sets the tone for the rest of Gray’s flawed economic analysis. It is precisely because capitalism is a competitive system based upon production for profit that neo-liberalism has appeal. Capitalism is in crisis and here we have a philosophy which strives to reduce wages, costs and social/welfare spending. Gray adds to his own confusion by correctly arguing that alternative capitalist models such as the European social market model will take a battering at the hands of US neo-liberalism as “bad” capitalism tends to drive out “good”:

  “In any competition that is waged with the rules of global laissez-faire, that have been designed to reflect the American free market, the social economies of Europe and Asia are at a systematic disadvantage. They have no future unless they can modernise themselves by deep and rapid reforms” (p.78).

Furthermore:

 “A mechanism of downwards harmonization of market economies is already in operation. Every type of currently existing capitalism is thrown into the melting pot. In this contest the socially dislocated American free market possesses powerful advantages” (p. 78).

Nominally Gray is right. He contradicts himself, however, by suggesting that the US should give up these “powerful advantages” and prioritise global stability instead. About the chance of this happening Gray is rightly pessimistic:

  “Yet the replacement of global laissez-faire by a managed regime for the world economy is, at present, nearly as Utopian a project as a universal free market. Such a regime could be established only by the world’s great economic powers acting in concert . . .”

He adds:

 “Without active and continuing American endorsement there can be no workable institutions of global governance” (p.200).

This demonstrates both Gray’s strengths and weaknesses, not to mention his apparent confusion. He seems to understand enough about capitalism to realise that neo-liberalism is not going to be stopped by an appeal to “reason” since it reflects the US’s attempts to dominate the world economy. One would be forgiven for thinking that such an implicit admission would be enough to transport him from subjective idealism to a more profound and coherent view of capitalism. Evidently not.

Intellectual swamp 

John Gray’s critique of neo-liberalism is rooted in what is effectively an indictment of the rationalist Enlightenment thought in which modern Socialism has its origins. This kind of “anti-rationalist” thinking is very popular today as capitalism’s intellectuals stumble around for new ideas with which to prop up this obsolete system. The most popular expression of this is probably Post-Modernism which denies the possibility of objective knowledge and saves most of its wrath for “ideologies” such as Marxism that dare to explain the real world as it really is.

Gray is not a Post-Modernist but he falls into the current swamp of confused pro-capitalist defenders who in intellectual terms appear to want to take us back several centuries. He fails to understand the true nature of capitalism which is a class-based exploitative society which produces for profit not need and is prone to war and crisis. His initial mistake is to associate the Soviet Union with the thought of Karl Marx and to therefore conclude by thinking that with all its problems capitalism has proved itself to be the only viable system for humankind: “there is no alternative to capitalism only its constantly mutating varieties” (p.195).

One should suppose that he is unaware of the case for real Socialism which is production-for-use via common ownership with democratic control. The Socialist Party stands for world-wide revolution, which according to Gray makes us guilty of the crime of “universalism”. To that charge we plead guilty—we are part of a suffering universal/global working class.

Gray’s analysis of the current crisis via False Dawn and his occasional articles in the Guardian do have some nominal resonance. His argument that a global depression could ensue complete with 1930s-style protectionism and trade wars is a possibility which we could countenance.. So although by default we may agree with some of Gray’s conclusions, his method for understanding not only the current crisis but capitalism itself is woefully inadequate.

Ultimately, Gray is a confused pessimist who argues against the pernicious effects of neo-liberalism without realising that he is really talking about the crisis of capitalism. But we should not allow his pessimism let him off the hook. When it comes to Utopianism he takes the biscuit:

  “The growth of the world economy could be a great advance for humankind. It could be the beginning of a many-centred world, in which different cultures and regimes could interact and cooperate without domination or war” (p.196).

Dave Flynn

Kosovo: Open for business (2008)

From the April 2008 issue of the Socialist Standard

Kosovo became an independent state in February and was immediately recognised by the US and most European countries. We look at one of the reasons why.

Kosovo emerged as an independent State after decades of uneasy existence as part of Serbia. There was an inevitable new anthem and new flag.  But there are real political concerns best not forgotten in the ballyhoo and hopes for a brighter future. 

One man interviewed by the BBC’s Mark Mardell described how during the war he fled his village with many relatives under attack by Serbian troops. He had to leave his aunt behind and she was burnt to death. He said: “Kosovo is rich in minerals and rich in farming land, is rich in all other aspects. Here, we provided wealth for so many years for the whole of Yugoslavia, there is no reason why we cannot provide now for just Kosovo. That’s why I’m saying Kosovo has a bright future.” (Mark Mardell’s Euroblog: ‘Mining Kosovo’s Future’  29 January)

Alongside the declared humanitarian reasons for the UN intervention in the Balkans in the 1990s there were other, economic and political, considerations also in play. It is these interests that will shape future developments in the states of the former Yugoslavia and dominate the lives of workers there.

The New York Times (8 July 1999) carried an article by Chris Hedges about the Stari Trg mining complex in Trepca, Kosovo. Possibly inadvertently, it gave an insight into some of the  considerations that surrounded the decision to intervene. According to Hedges, “The sprawling state-owned Trepca mining complex, the most valuable piece of real estate in the Balkans, is worth at least $5 billion.”

It was the reported view of the mine’s director, Novak Bjelic, that “The war in Kosovo is about the mines, nothing else. This is Serbia’s Kuwait – the heart of Kosovo. In addition to all this, Kosovo has 17 billion tons of coal reserves.” The Yugoslav web site www.yugoslavia.com (now defunct) described Trepca as having the “richest lead and zinc mines in Europe.” The capacity of the lead and zinc refineries ranked third in the world and the area as a whole represented some 80% of Yugoslavia’s mineral deposits. The problem was they were old and inefficient and seriously polluting.

According to Michael Palairet of the University of Edinburgh, a leading authority on the economic and social history of the Balkans,

  “The Trepca system ‘as a rule’ lost money under Yugoslav socialism … Because of Trepca’s incapacity to generate funding of its own for investment, all investment funding had to be financed externally, by fund providers who did not anticipate that they would see any return on (or of) their capital.” In his opinion the $5bn figure quoted by Hedges above was exaggerated. However while Trepca consistently performed poorly, this was not because it could not have been managed more effectively: “Unlike most heavy industry… Trepca had good mining assets and low cost access to energy, so on the face of things there were no structural reasons for its inability to trade profitably.” (European Stability Initiative)

Further insight may be gained into the economic underpinnings of the UN intervention from a report by the International Crisis Group. The report is interesting in that it provides further evidence that the breakup of the former Yugoslavia was in large part motivated by conflicting economic interests. The various regions of the Federal Republic had fallen out over how their assets and liabilities were to be divided and allocated. The differences were long standing and could not be resolved peacefully. In other words it was a fight among competing capitalists interests. One of these interests lay in Kosovo – the supposed “heartland of Serb identity.”

 “Trepca is a sprawling conglomerate of some 40 mines and factories, located mostly in Kosovo … Its great mineral wealth is the basis of the economy of Kosovo, but the complex is badly run-down as a result of under-investment and over-exploitation by governments in Belgrade.” (Trepca: Making Sense of the Labyrinth (ICG Europe Report N°82, 26 November 1999) )

In 1974 Tito’s new constitution accorded the province near-republic status, with its own parliament and courts, Kosovo elites enjoyed a period of greatly increased control over their own resources. They used their enhanced authority to build factories in Kosovo that capitalised on their mineral production, created thousands of jobs, and brought some income into the province.

After Tito’s death, pressure grew for more rights and greater political and economic autonomy, but with little success. Belgrade reasserted control of the mines.  Kosovo Albanian workers were accused of having stolen vast quantities of gold and silver and many engineers and technicians were fired.

  “From 1981-89, Belgrade monopolised the export of Trepca’s minerals to Russia and elsewhere, reaping the profits in hard currency and oil, while compensating the Kosovars only with electricity and other non-fungible forms of payment.…

  Trepca’s Kosovar management attempted to sell its products on the European market and to modernise the facilities’ modes of production, only to be foiled time and again by the Serbian government, which was in the process of “integrating” Serbia’s economy – that is, of tethering all economic sectors even more closely to Belgrade.

  By the late 1980s, with the final integration into the Serbian system of the power generating system, Kosovars had lost virtually all control over their economy, as they would over their politics and civic freedoms.” (Trepca: Making Sense of the Labyrinth (ICG))

In 1996 Trepca had exported $100 million of products, making it the largest exporting company in the Federal Republic of Yugoslavia and an invaluable foreign exchange earner at a time when the country was experiencing grave economic difficulties.

Throughout the 1990s the ownership of Trepca conglomerate was never entirely clear. In November 1997 Trepca was under consideration for privatisation by the federal government in Belgrade. This process stalled when the ‘red businessman’ Zoran Todorovic, was murdered by a gunman in Belgrade. Todorovic had been a close confidant of Slobodan Milosevic and was one of the richest men in Yugoslavia.  He was one of a group of state capitalists who had been able to use their political connections to purchase state assets at bargain prices. (He was also director of Beopetrol, another state firm in the process of being privatized.) This was in effect a conversion of state owned assets into de facto privately owned ones by the ruling capitalist class.

Officials of the UN Interim Mission in Kosovo (UNMIK), who took over governing Kosovo in 1999 after the withdrawal of Serbian troops, concluded  that the complex was overall public property and therefore came under their authority in accordance with its mandate. The then head of UNMIK, Bernard Kouchner (now French Foreign Minister), confirmed that an international consortium had been appointed to run the plant. A $16m (£10.7m) investment package was also announced, funded by Britain, France, Spain, Germany, and the EU. The money was to be spent on a full-scale refurbishment of the plant prior to it being sold off.  “We have no intention of closing any part of the Trepca mining complex. On the contrary, we’re going to make it safe and profitable.” he said. (The Guardian, 15 August 2000)

But it was not only the mines that capitalist interests had their eyes on. In July 2000 it was announced that a fund run by the billionaire George Soros was to invest $150 million (most backed by U.S. guarantees) in companies in the Balkans. Soros Fund Management would invest $50 million of it own equity in new businesses, expansions or privatization in the region and would have full autonomy to choose the investments in a whole swathe of South East Europe. Soros had invested millions of dollars in philanthropic endeavors in the region, but said this fund would practice “tough love,” and be driven purely by profit.

The U.S. Overseas Private Investment Corporation had agreed to provide a loan guarantee for another $100 million of investments. OPIC describes itself as a self-sustaining federal agency that sells investment services to American businesses expanding into emerging markets around the world. It provides a level playing field for U.S. businesses in emerging economies.

“Since 1971, OPIC has supported nearly $130 billion worth of investments that will generate over $61 billion in U.S. exports.” (Dead Link.)

The Soros investment was conceived at a “donor” conference in Sarajevo in 1999. It was one of a series of efforts to take advantage of emerging investment opportunities in the Balkans. “A year ago, after NATO won the war in Kosovo, more than 40 leaders came together in Sarajevo determined to win the peace with economic investments”, according to National Security Advisor Samuel M. Berger.

George Munoz President and CEO of OPIC said he was pleased that they were making the region safe for international capital. It was a demonstration that “Southeast Europe is an important region on which we should focus our efforts, to enable it to rebuild and enter the global marketplace as a full partner. The Southeast Europe Equity Fund is an ideal vehicle to connect American institutional capital with European entrepreneurs eager to help Americans tap their growing markets.”

The Soros Private Funds Management, he said, was sending “ a strong, positive signal that Southeast Europe is open for business.”

Gwynn Thomas

Letter: Eastern Europe (2008)

Letter to the Editors from the June 2008 issue of the Socialist Standard

Dear Editors

I was interested to read Gwynn Thomas’s article on Kosovo (and Soros) in the April issue.

In the 1990s, the OSCE created a democracy fund to ‘democratise’ East Europe. Reagan and Hurd ‘warned’ Rumania and the GDR, respectively, in their elections, that unless opposition parties enjoyed “reasonable access” to (state-control-led) media, the resulting administration would not enjoy access to low-interest loans from Western banks.

As an enthusiastic investor in/supporter of “democratic” capitalism, Bob Maxwell donated (with others’ money?) to the OSCE fund—and ‘emerged’ with a Polish TV station and a Hungarian newspaper, if I recollect.

And, in the 1996 Bosnian election, a fascist candidate was able to access the OSCE fund, for politicking/propagandising purposes. The Foreign Office denied it had contributed to the support fund, but claimed Italy had provided the funds.

I thought all funds were usually contributed to pro-rata (Guardian article and Foreign Office correspondence to me.)

D. Shepherd, 

London NW4

These Foolish Things: All capitalists now? (1997)

The Scavenger column from the May 1997 issue of the Socialist Standard

All capitalists now?

The controversial Welsh water and electricity company Hyder wants to flush out 50,000 small shareholders because they are too expensive to deal with. The company is spending £150,000 on Project Shrink to persuade the investors to sell their shares. It hopes to save £40,000 a year on printing and distributing annual reports and dealing with dividend payments . . . Other water and electricity companies are understood to be planning to follow Hyder's example and purge share registers of small but expensive shareholders. 

(Financial Mail on Sunday. 23 February.)

Competition? Not likely!

After 18 months of haggling, the giant De Beers organisation is about to reassert its iron grip on the $50 billion world diamond market . . .  For nearly two years Russia has been trying to circumvent De Beers’ near monopoly on the market. Producers in Australia, Angola, and possibly from the nascent Canadian diamond industry are already doing so. But now Russia's President Boris Yeltsin is poised to sign a new agreement to sell the bulk of its diamond production exclusively through De Beers’ Central Selling Organisation. Two-thirds of the world's diamonds reach the market through the controversial cartel . . . De Beers spends $200 million annually reinforcing the image of diamonds around the world. 

(Financial Mail on Sunday, 23 February.)

Of course

When George Soros speaks, the world’s markets listen. This time, though, they may not believe what they hear. Mr Soros is proclaiming that capitalism and its system of speculative trading — the same system that has brought him billions — has supplanted Communism as the principle threat to freedom . . . "I have made a study of the international Financial markets, and yet I now feel that the untrammelled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society." 

(Independent, 17 January.)

Wealth versus ecology

Kuwait, Iran and other oil producing countries are demanding financial compensation from the industrialised world for loss of revenue if any new action is taken to curb global warming.

(Guardian, 20 February.)

Poor health

In an article co-written by Professor Andrew Haines of the Royal Free Hospital. Dr Smith [editor of the British Medical Journal] said wealth was the single most important driver of health world wide, even more important than smoking. The authors said: "We are beginning to understand that, for developed countries, relative poverty — having an income substantially below the mean for that society — is a more important influence on health than absolute poverty (lacking the basic means to live)." They said things are getting worse, not better, with the gap between rich and poor tending to widen between and within countries — with inevitable effects on health. 

(Herald, 21 February.)

Business is war!

Letting your colleagues train with the Reserve Forces doesn't just contribute to the country's defence. It also develops qualities of leadership, motivation and initiative in your staff that are vital in helping to drive business forward . . .THE VOLUNTEER RESERVE FORCES. BRITAIN'S BEST KNOWN BUSINESS SECRET. Issued by the National Employers Liaison Committee on behalf of the Territorial Army and the Volunteer Reserves of the Royal Navy, the Royal Marines and the Royal Air Force.

The Scavenger

Capitalism and the Comet (1993)

From the January 1993 issue of the Socialist Standard

This is the way the world ends This is the way the world ends This is the way the world ends Not with a bang but a whimper.—The Hollow Men.

T.S. Eliot, it seems, was wrong. Dr Steel, an expert on asteroids and leader of the world's largest team involved in sighting new pieces of celestial debris, recently informed the second Australian Space Development Conference that Comet Smith- Tuttle, first sighted in 1862 and rediscovered in September 1992, is on course to collide with the planet Earth on 14 August 2116.

Comet Smith-Tuttle is a 3.1-mile-wide ball of rock and ice travelling through space at a speed of 37 miles per second. The comet’s collision with the Earth will create an impact force of 20 million megatonnes, or about 1.6 million times the force of the bomb dropped on Hiroshima. A head-on crash could destroy up to 95 percent of humanity.

With the plot of a thousand sci-fi novellas becoming fact, is any action likely to be immediately instigated to safeguard the future of our children's children’s children? Having been given one hundred and twenty four years’ notice of this impending event, do we agree with Samuel Johnson that “when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully”? Or, is it pointless to concern ourselves with something which will not directly affect a single person alive today?

Putting one in mind of Sir Boyle Roche who asked "what has posterity done for us?’’, the leader column in the Times (26 October) takes a very facetious view of the whole affair. Whilst contemplating the effect of Comet Smith-Tuttle’s arrival upon the stock market and property prices in 2116, the paper concludes that placid contemplation of the world’s fate has always worked up to now. The Times is, however, surprised at the prospect of civilization being brought to and end by a comet. It shares the existing belief that Armageddon is likely to occur through man-made pollution or nuclear war.

Should we placidly accept that the present world-wide system of society— capitalism—will still exist in the twenty-second century? Will the natural competitive elements of a system dedicated to the exploitation of the planet’s resources for financial gain, and to the economic exploitation of the majority of people living on the planet, be suspended whilst global co-operation is exercised in finding some way of averting the threat to ruling class and working class alike?

The odds of a head-on collision with Comet Smith-Tuttle are calculated at 400 to 1. The odds on the world being destroyed by an “internal’’ agency rather than an external one must be considerably shorter. Contemplate the effect of another hundred years of a social system based upon production for profit, not need. A system where political and economic control rests with a small minority. A system where the majority are forced to sell their mental and physical labour power to that minority in order to live. A system where the increasing wealth created by the majority is appropriated by the minority.

Threat from down here
Although no-one now living aged one hundred years has ever experienced the effects of a major collision with the Earth of an extraterrestrial object, they would certainly have experienced several times over the effect of a capitalist crisis of over-production. The same edition of the Times that carried the report of Comet Smith-Tuttle. carried stories with a more contemporary significance. We learn that George Soros, an Hungarian-American financier made £589 million profit from Sterling speculation during ‘‘Black Wednesday”. There are reports covering the march through London of 200,000 workers in support of the redundant miners.

The protests and demonstrations by workers against the effect of yet another capitalist crisis of over-production are understandable but misplaced. Instead of agitating for a fair day's pay for a fair day’s work the working class should be engaged in political action with the object of abolishing the wages system completely. It must be obvious that the bumblings and blusterings of hypocritical politicians and “labour leaders’’ can no longer disguise the fact that they arc powerless to influence the actions of the market system.

Capitalism has run its course. The only question is how much longer the working class are prepared to see capitalism thrash about continuing to do untold harm to millions of workers. The working class has a choice. It can continue to choose to support a social system which brainwashes them, which bullies them, which suppresses them, which makes them homeless, which makes them hungry, which makes them poor, which exploits them and which kills them. Or the working class can choose to realize that we are many and they are few. It can choose to stop its own exploitation and decide to hasten the demise of capitalism and bring about a social system based upon common ownership of the means of production and distribution. The working class can choose to abolish poverty, abolish famine, abolish want, abolish lack of opportunity, abolish the wages system. abolish capitalism.

Without an understanding of the present social system and a desire to bring about the social changes needed if we are all to have a future, simply rioting in the streets will not bring about the social revolution required to implement real global cooperation. After bringing about, and winning, that revolution, the task of preventing a comet from colliding with, and destroying the world must surely be a simple task for a world which by then has known many years of working together to clear up the mess left by capitalism.

There is evidence that the dinosaurs, rulers of the Earth in their time, were made extinct when an asteroid collided with the Earth sixty-five million years ago. We are not dinosaurs, but the social system has become one. It needs to be made extinct. Human beings are the most highly evolved species which has ever inhabited this planet. It seems ludicrous and unlikely that we should allow capitalism, which long ago fulfilled its historical purpose, to continue to prevent us all from progressing toward a collective and individual potential which individuals in the past could only dream about.

Nemesis is not a comet named Smith-Tuttle. Nemesis is the world-wide working class deciding that capitalism has served its purpose and that the time has come to end capitalism now before capitalism has any more opportunities to put an end to us.

Dave Coggan

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

Letters: The Slump (1999)

Letters to the Editors from the January 1999 issue of the Socialist Standard

The Slump

Dear Editors,

Concerning "Boom goes bust in Asia" (Socialist Standard, October) Robert Bremner in New Left Review 229 points out how the unwillingness of capitalists to write off earlier investments inhibits the purging of excess capacity and overvalued capital. I too think that a 1929-type slump is required if there is to be a sustained recovery. I detect growing opposition on the Right to rescue packages, but the write-off fear factor works against this.

Re the October editorial, if I did not know you better I would be accusing you of predicting the collapse of capitalism. George Sosos's wrong if he is going that far, although I question whether he is. Unless a 1929 repeat leads to the appropriate reaction from the working class, you can safely bet on the continuation of capitalism. Betting on what happens next in the short term is a totally different matter of course, but while many are seeking shelter, many fund managers and others are still having to make decisions which cannot be any better than actually betting on what happens next.

Ted Edge, 

Lytham St Annes

Reply: 

As you point out, of course we don’t believe that capitalism is going to collapse. As we pointed out in the pamphlet we brought out in the course of the 1930s' slump, Why Capitalism Will Not Collapse, capitalism will stagger on from crisis to crisis until the working class organises consciously and politically to bring it to an end and replace it with socialism.

As to Soros (above), since he always talks about the "collapse" or "disintegration" of "the global capitalist system", he probably has in mind a regression to a collection of "national capitalist systems" behind their own tariff walls and exchange controls—Editors

All together?

Dear Editors,

Having just received, and read, an information pack on the Socialist Party I am still convinced that many members of other parties share your basic aspirations. Obviously there exist differences of opinion and interpretation of Marxist philosophy, but I fail to comprehend why the apparent hostility exists towards what I would describe as other left-oriented movements.

As long as those seeking radical reform of society continue to remain divided (on party lines) there, in my opinion, will be no change in the present order. The capitalist classes are totally unscrupulous as to whom they form bonds to oppress and exploit the working class. Can't we all unite under one banner and, if necessary, seek compromise amongst different factions who basically share one common goal?

Christopher Wilkins, 

Scarborough

Reply: 

We wouldn’t deny that members of many parties, and of none, share the "basic aspiration" of wanting a better world. Where the disagreements begin is over the features of this better world, which we say can only be achieved on the basis of the common ownership and democratic control of productive resources—our definition of the word socialism.

As you point out, there are others who say that their aim is socialism, or make reference to the works of Marx, but few of them mean by socialism what we (and Marx) do. For them "socialism" means state ownership and control, which in our view amounts only to state capitalism. So why should we—how can we—get together with people who don’t have the same aim as us?

As to the much smaller group of people out there who define socialism in the same way as us, they generally disagree with the way we advocate achieving it, i.e. the democratic political action, via the ballot box, of a majority of conscious socialists. Some of them favour violent insurrection or a general strike or a minority dictatorship as a means to get socialism. Others favour going off into the wilderness and setting up communities or advocate reforms they claim are steps on the way to socialism.

We certainly think that all those who want socialism in the sense of a society based on the common ownership and democratic control of resources should get together in a single organisation that concentrates on advocating socialism and nothing else. Our message to them is stop entertaining illusions about minority action or reforms and join us in creating a bigger socialist party—Editors

Socialist Pioneers

Dear Editors,

I would like to add a few additional comments to Colin Skelly's interesting article, "Pioneers of Socialism" (Socialist Standard, November 1998).

William Morris joined the Democratic Federation, which became the Social Democratic Federation in 1884, [not] in 1883. However, on 27 December 1884 Morris, together with Edward Aveling, Eleanor Marx, E. Belfort Bax and a number of other members of the SDF council, resigned and issued a statement giving their reasons, for "a body independent of the Social Democratic Federation". They said: "We have therefore set on foot an independent organisation, the Socialist League, with no intention of acting in hostility to the Social Democratic Federation, but determined to spread the principles of Socialism."

Unfortunately, as Colin Skelly noted, the Socialist League was taken over by a group of anarchists whose main aim was the destruction of the state rather than the establishment of socialism, which would in fact have resulted in the demise of the state anyway. (For a detailed account of the rise and fall of the Socialist League, mainly from an anarchist viewpoint, see The Slow Burning Fuse by John Quail.)

The main weakness of the Socialist League was that it "had no intention of acting in hostility" to the SDF. And after its demise, a number of its former members returned to the Federation. Even Eleanor Marx held economics classes at 337 Strand, London, the head office of the SDF, during the 1890s. Indeed, it was at the economics classes held by Eleanor Marx, in 1895 and 1896, that Jack Fitzgerald and a number of other members of the SDF learnt their Marxian economics, which ultimately led to their expulsion, or resignation, from that organisation and subsequent founding of the Socialist Party. When the Socialist Party was formed, its members made certain that their Declaration of Principles would include a hostility clause against all other parties (such as the SDF) who advocated "palliatives", not socialism.

Peter E. Newell,

Colchester

Sting in the Tail: Send for Jeeves (1991)

The Sting in the Tail Column from the June 1991 issue of the Socialist Standard

Send for Jeeves

The characters of P.G. Wodehouse may seem a little outdated, but the useless, luxurious lives of the very rich don't seem to have changed all that much since the days of Bertie Wooster and Jeeves.

Patrick Davison, a butler to the millionaire George Soros, recently won his case for unfair dismissal; and in reporting the tribunal the newspapers revealed a little of the outrageous life-style of the rich in Britain today. The butler insisted to Mrs Miriam Sanchez, a recently appointed chef, that she use less expensive wines when preparing her gourmet meals.

But Mrs Sanchez complained to Mr Soros's wife Susan, got her own way, and began to use Chateau Lafite wines costing between £400 and £500 a bottle

Glasgow Herald 8 May

All lovers of haute cuisine will be delighted that the present economic slump is not affecting the high standards of the Soros household.

Unkindest Cut of All

At the Scottish Tory Party conference in Perth last month you could hear some remarkable nonsense, but it is doubtful if any of the delegates could have topped the nutty ideas of that foolish fop Mr Nicholas Fairbairn MP.

When not grabbing the headlines of the gutter press with his eccentric notions of sartorial elegance (he once appeared at Buckingham Palace in a tartan three piece suit that made him look like a demented Bay City Roller fan) he thunders forth on such issues as World Hunger.

In Africa, they are being encouraged to have more children. I feel there should be more sterilisation programmes by these governments and It should be a world-wide priority.

Glasgow Herald 10 May

Like many politicians Fairbairn believes that World Hunger is caused by too many people. He of course does not take the socialist view that this planet is capable of feeding all the world's population if we had production for use instead of production for profit.

Sterilisation as a solution to World Hunger is stupid. Although it is a pity perhaps that Fairbairn's father hadn't been a volunteer for such a programme.

Dead Leninism

We forked out the £1.80 to buy the May Issue of "Living Marxism", the monthly review of the Revolutionary Communist Party.

The contents quickly reveal the RCP as yet another bunch of Leninists when, for example, we read about the alleged need for

... arming a minority with an understanding of the necessity for social change...

Of course there's not one word about what the social change is to be, merely a mention of "a new society".

But why only a minority, why not a majority? Well, being Leninists they certainly don't want THAT!

After all, if the majority saw the necessity for real social change by replacing capitalism with a world-wide society based on common ownership and democratic control then there wouldn't be any place for Leninist leaders, would there?

Thieves Fall Out

The Institute of Directors has been described as the Tory Party at lunch but now its director general has fallen out with the government.

Peter Morgan told the Institute's annual conference:

This awful recession . . .  is a failure of government management. It is government failure, not market failure.

The Guardian 24 April

Morgan imagines that if the government had followed policies approved by him then the recession would have been avoided. He is wrong. No matter what policies governments pursue, the normal boom - slump cycle of capitalism cannot be avoided.

But he was right about the relationship between inflation and wages when he blamed the government for "high wage settlements".

I have absolutely no doubt that inflation causes high settlements and not, categorically not, the other way around.

Remember this the next time you hear about "inflationary wage rises"

May Day Mayhem

May Day in Glasgow was fine and sunny but the number of marchers continues to decline. The main speaker at the official rally on Glasgow Green was a trade union leader but his meeting attracted fewer people than the beer tent did.

One fringe activity was a platform on which every leftist group was invited to speak. And so they did but often only to slag off one another.

For example, a Trotskyist attacked "the Stalinists" and was immediately denounced by an anarchist for supporting Trotsky, "the butcher of Kronstadt".

Some speakers urged trade union action while others were hostile to this, but all were united in hammering the Labour Party although most still wanted to "get the Tories out" and "a real Labour government in".

Incidentally, the big demand from the organisers of this meeting was ... the reinstatement of the demoted curator of the People's Palace Museum!

Meanwhile, Glasgow branch members of the Socialist Party set out their literature and, despite the surrounding din, held a brief meeting. That, we can swear, was the only occasion when anything about socialism was allowed to intrude during the whole afternoon.

Don't All Rush

Fancy a des res with "unrivalled view" over Kensington Palace Gardens? This apartment has polished marble floors throughout, four reception rooms, four bedrooms each with bathroom en suite, and has Prince Charles as a near neighbour. (ITN News 10 May).

And because the market is at rock bottom it's yours for a giveaway £13 million. This includes antique furniture worth £1 million but a discount can be arranged should you wish the apartment unfurnished.

Still not sure? Well, this residential block is so exclusive that its development officer thinks the apartment will go to the type of person “who needs a home in all the major capitals".

You'll think about it? Yes, that's just about all workers can ever do about capitalism's extravagances.

The Blackboard Jungle

A good example of the Tory Party's idea of open government was explained in The Independent on 13 May, in reporting how the government dealt with critical reports from the school Inspectorate on the state of education. 

The Government found such criticism embarrassing. In 1987 it held back the Chief Inspector's report until after the general election. Only after the election did the public find out about the large increase in unfilled teacher vacancies, the crumbling classrooms and the great divide between schools where parents could afford to buy textbooks and those who could not.

It is heartening that some Tory MPs are eager to avoid this dishonesty - they are proposing a bill to abolish the inspectorate!