The Common Market Special Survey: 4. Agriculture (1962)

From the January 1962 issue of the Socialist Standard

Agriculture may not be the most important problem for Britain in its negotiations over the Common Market but it is certainly going to be one of the trickiest.

Nor should it be forgotten that agriculture has been causing a great deal of trouble within the Common Market itself. Only recently, France declared that she would veto any fresh moves on the industrial front until West Germany showed more enthusiasm for removing the barriers on the agricultural side. The motive, of course, was the usual one—France is keen to get a larger slice of the German market for her agricultural exports.

The fact that Denmark, another large exporter of foodstuffs, has also applied for membership of the Community will cause further complications. It will be interesting to see how all these conflicting interests are finally sorted out, if in fact they ever are.

Britain

But there can be no doubt that British agriculture has plenty to worry over. Home farmers are overwhelmingly opposed to Britain going into the Common Market and have done their utmost to prevent it. There is equally no doubt that it is fear for their agriculture that has caused many Commonwealth countries to make such an outcry about Britain’s application to join. But in this modern world of capitalism it is the interests of industry that call the tune and the Macmillan Government has gone on regardless of both farmers and Commonwealth.

British agriculture has good reasons to be wary of the Six. In the first place, in spite of all the efforts during and since the war to step up home production, the U.K. has still to import more than half its food. Most of these imports come from the Commonwealth—meat and dairy produce from New Zealand and Australia, wheat and coarse grains from Australia and Canada, and such things as fruit from all three. Much of this comes in at preferential tariff rates, though this benefit is not so important as it once was.

On the other hand, the Common Market is virtually self-sufficient in foodstuffs. Indeed, certain countries like France and the Netherlands are now actually piling up surpluses. France in particular, as a result of improved methods since the war, is rapidly coming to the point of crisis in the production of some items, for which she is becoming desperate to find markets. Nor is the position going to improve since she has vast capacity to expand. By far the largest country in area (second only to Russia in Europe), and larger still in actually usable agricultural land, it has been estimated that with fully improved methods she could supply the whole of the Six with some products, notably wheat and beef. It is the fear that France may insist on supplying Britain with wheat that is causing Canada particular concern.

Both France and the Netherlands, and Denmark if she also joins, see Britain’s entry into the Common Market as providing a welcome outlet for their agricultural exports. The British farmer takes a much less rosy view of the prospect.

His pessimism is made worse when he considers a further important difference between the way his products are sold compared with the Six. This is strange on the face of it because food prices are generally higher within the Six than they are in this country and this should apparently be to his advantage.

But the reality is not so re-assuring. The reason why food prices are generally lower in Britain is because it has long been the policy of British governments to keep them down artificially. Their method of doing this has been to allow food to come into the country almost free of restriction and let prices find their own level irrespective of the fact that these prices are below those at which the home farmer can produce economically.

This policy if left unchecked would, of course, soon bring most British farmers to bankruptcy. To avoid this, the Government has regularly made up the difference between the farmers general price and the imported price by means of subsidies. This difference is certainly not chicken-feed—it amounts to about £250 million a year, plus many more millions in the way of other payments to assist and improve their farming.

The Six

This procedure is in marked contrast to the system in most countries of the Six, whose governments have been more inclined towards policies of keeping out foreign imports by means of tariffs and quotas. They have been able to do this mainly because they are largely self-sufficient in food and the result has been that though prices are higher they are at the same lime more closely related to the farmers’ actual costs.

In practical terms, of course, the two systems boil down to essentially the same thing. All that happens is that the subsidies needed to help out the British farmer are found from extra taxation so that overall the amount actually received is near enough the same. But it has been an exceedingly useful method for the British capitalist class in keeping food prices stable and thus of helping to keep wages under better control. It was, of course, used to its greatest effect during wartime and in the critical period immediately afterwards.

The Six have already made it clear, however, that they will expect Britain to fall in with their system. It is also pretty obvious that the British Government will not in fact be unduly upset about this since whatever merits the subsidy system has had in the past it has been causing them a lot of headaches recently. They are particularly restive about the financial burden: assistance to be paid out to farmers is even higher than usual this year, enough to make them wonder whether the time hasn’t come to have done with it altogether.

Prices

If therefore Britain does join the Six a rise in food prices seems highly likely. Estimates about this vary from a shilling or two per head per week to something very much more, but the truth is that nobody really knows. One thing is certain, however, and that is that it would provide the Government with a wonderful opportunity to whittle down the effective buying power of wages at a time when the wind of competition within the Common Market was already making the British worker feel chilly.

Agriculture is notoriously a difficult subject to make forecasts about. Governments play about with it and it has always provided a voting lobby sufficiently powerful to make political parties commit themselves to all sorts of peculiar things to win farmers’ support at election times. In addition, until the atomic bomb came along to make the question academic, capitalist governments everywhere have always had some regard for its importance in times of war. The fear of blockade has always been a bogey for them. One can never be certain, then, of what will happen when governments start talking about agriculture and even less certain when a group of their spokesmen get round a conference table to bargain and horsetrade.

A few things can be said, however. It seems fairly certain, for example, that if Britain does go into the Common Market ii will do so at the considerable expense of Commonwealth countries. Present indications are that whilst the Six may how some special consideration for New Zealand, whose economy is almost completely independent upon Britain taking all her meat products and butter, they will have little time for the claims of Australia and Canada who will have to start looking elsewhere for markets for their products. Australia has in fact already begun to do this and is now selling to China and Japan.

Bigger Units

Agricultural interests in France and the Netherlands would gain from this, though Denmark will provide extra competition if she also joins. Italian horticulture will also be given a fillip since the hitherto heavily protected U.K. market seems almost certain to be made more accessible. It is hard to see anything other than a catastrophic effect upon British horticulture, in fact, unless the negotiators bring something remarkable out of the bag. Expensively-heated glasshouses are no match economically for free sunshine and fast transport and can only have their existence in (he mad world of capitalism.

But even more clearly than with industry, the future of European agriculture is going to reflect the inexorable drive of capitalism towards bigger units, mechanisation, and more economic production.

In Italy, 44 per cent. of the population are still dependant upon the land for their living. In France the proportion is 25 per cent. and even in Germany it is 15 per cent. The figure in Britain is 5 per cent.

All these countries are taking deliberate measures to get their peasants off the land and into the towns and factories, though economic forces themselves are probably doing the work more effectively on their behalf. Hundreds of thousands of small farmers are fated to leave their farms in the not far-off future and their land will be merged into larger holdings, revert to its natural state, or be transformed into state forests.

Even in this country the process is still going on. Many small farmers are only able to keep going because of their subsidies from the State. Each year still shows a drop in the number of people getting their living from the land.

The Common Market, therefore, only throws into prominence a process which has been part and parcel of capitalism since its existence. In fact, the Common Market is itself a reflection of this process on the international field. The same impetus which forces firms to amalgamate within a country’s boundaries now forces the countries themselves to look outside their boundaries.

Surplus

But whilst the implications for industry of this process are great, for agriculture they are enormous. That is why all the negotiators at Brussels, whether they belong to Britain, the Six, Denmark, Ireland, or any other country with agricultural interests to protect, are going to talk tough and bargain hard.

And, very much in their minds and hanging darkly over all, is the shadow of surplus. Surplus in a world where half the population live near to starvation and another quarter not very much better.

And that for us is the real dark shadow over all this business of agriculture and the Common Market.

Stan Hampson

The Common Market Special Survey: 5. The Commonwealth (1962)

From the January 1962 issue of the Socialist Standard

It is going to be a trying time for our politicians. British capitalism has been forced, after much dithering, to face up to the harsh realities of its own world. No more can it ignore the increasing challenge to its position in a highly competitive world market, and the fact that the relatively easy markets of the British Commonwealth are no longer sufficient to offset this. As The Observer pointed out almost three years ago:

“At the moment the Commonwealth accounts for nearly half our trade but it would be foolish to pretend that it offers anything like the growing market of Europe.”

This must be a major consideration to our rulers, despite the high-flown claptrap which they have talked on occasions about “Commonwealth family of Nations.” So Britain goes cap in hand to “the Six” and Tory Ministers make a flying tour of the major Commonwealth Countries in an effort to ride out the inevitable storm of protest which their decision has aroused.

Since the end of the Second World War in particular, successive Governments have never tired of telling us how important it is that Britain should export more and more. So perhaps we may be forgiven if we have forgotten that Britain itself is a large and important market for goods coming from Canada, Australia and New Zealand, for example. And it is the fear of losing this which is behind the undignified squabbles which have taken place over the past few months.

Canada

In a recent survey by The Times we read that “. . . . there is an undoubted fear that by Britain’s closer association with Europe, Canada is going to suffer in what is her second best market, especially in agricultural and chemical products as well as in a newly found market for her manufactured goods.” So seriously do the Canadian capitalists view the prospects, that only on November 11th last, The Observer was able to report that relations between Canada and Britain on the Common Market issue were worse than at any time since preliminary negotiation began.

Over the other side of the world in New Zealand, there is near-panic at the threat of a shrinking market for primary products—lamb, wool, butter and cheese—in Great Britain. Understandably so from the viewpoint of the N.Z. farmers. Apparently fifty-seven per cent. of their total exports were sold in the United Kingdom in 1959. And more recently The Dominion (Wellington) asserted that some eighty per cent. by weight of N.Z. dairy products now go to the British Market. The remarks of Prime Minister Holyoake further emphasise with what trepidation the future is viewed; just listen to his words, reported in the National Party Journal Freedom for July, 1961 :

“It is no exaggeration to say that our dairy industry and our lamb production have been based on and are designed to serve the needs of the United Kingdom Market. They have been based on the idea that our expanding production could receive a full and remunerative outlet. Without it, the whole economic future of New Zealand is thrown out of balance.”

Strong words indeed! And matched equally by (hose of leading government spokesmen in nearby Australia. Their Common Market Communique issued on July 11th speaks of “. . . the serious adverse consequences for Australian producers and for the Australian balance of payments which would confront Australia if the United Kingdom were to enter the Common Market on a basis which failed to safeguard Australian trade interests for the future.”

Australia Looks Elsewhere

Wheat, meat, dairy products, bas; metals, sugar and fruits constitute the bulk of Australian exports to Britain and are currently valued at almost £200 million Sterling. The Minister for Trade, Mr. McEwen, has asserted that Britain is Australia’s biggest market. So little wonder then, that there was such “full and frank” discussion with Mr. Duncan Sandys when he paid his visit a few weeks before.

But despite the forebodings of official spokesmen, it does not seem that Britain’s decision has taken the Australian Government completely by surprise. For some years now, attempts have been made to find alternative markets, and it is interesting to learn that Japan has now become the biggest buyer of Australian wool and a top-level buyer of many other important products. Trade with Japan in 1960 was worth £160 millions.

In a press interview on last July Mr. Menzies admitted the great political implications of the Common Market. He has described it as possibly “a third power” in the world :

“(But) we record our view that the Commonwealth will not be quite the same . . . this will lead to a loosening of Commonwealth relations.“

So where will they turn then? Might there be just the possibility that yet “a fourth power” will emerge, embracing Australia, New Zealand and other far eastern States, and with Japan as a leading member? Does it sound too far fetched? Nothing should surprise us in a capitalist world. Canada in her turn could swing politically in favour of the U.S.A. if the tariff walls of the Common Market go up against her. She already has close economic links and American capitalists have large investments in Canada.

And for the workers of the Commonwealth? Well, there is one market which they have always had in common with their opposite numbers in every other part of the world, and that is the labour market. This basic fact will not, of course, be altered. They will remain workers facing the common problem of Capitalism—and how to get rid of it.

Eddie Critchfield

What Shall We Do About the Falling Pound? (1976)

From the June 1976 issue of the Socialist Standard

Before 1939 all schoolchildren, including the ragged and undernourished, had shown to them the vast pink-tinted areas on the map of the world that were “ours”. Every child knew also the price of the American dollar in English pounds. Immutably, there were four dollars to a pound. A dollar was five shillings; the English half-crown piece was called, in popular slang, “half-a-dollar”.

No doubt this recollection helps to produce a sense of calamity over the fall in the price of the pound. In June 1972, before the pound was "floated’ by the British government, the exchange rate was $2.60. This year it has gone below two dollars to about $1.80; on 14th May it was $1.8275. The use of the words “weakening” and "strengthening” implies further that these figures are the index of a frightful disease, caused — of course — by the sloth and greed of the working class, and remediable only by a prolonged fast. All of this is untrue. The progressive fall in the pound since the war has been the result solely of policies pursued by Labour and Conservative governments alike. As to how much difference it makes, workers should ask if they were better off when the pound was “strong” and the map was spread with pink.

Prices at a Stroke

A drop in the exchange rate has the same effect as devaluation of the pound. Devaluation was carried out officially, as part of economic policies, by Labour governments in 1949 and 1967. The 1949 devaluation from $4.03 to $2.80 was in fact proportionally greater than the total fall since. At the time, Conservative spokesmen said any more devaluation would reduce the status of sterling “to that of one of the untrustworthy currencies of Europe or South America” and “indeed there would be nothing for this country to look forward to” (David Eccles and Oliver Stanley, House of Sommons, September 1949). Nevertheless, the Conservatives’ floating of the pound in 1972 was done in the knowledge that it could only move downwards, and the result was a further devaluation.

The necessity for devaluation by governments is caused by rising prices. If prices go up markedly in Britain it means that British exports also become dearer and therefore less competitive in world markets; while ether countries’ goods are rendered relatively cheaper, so that imports increase. The result is an adverse balance of payments. In 1948 the dollar deficit ranged from £93 million to £147 million a quarter, and in the quarter before the decision to devalue it was £157 million.

The aim of devaluation is to move towards a reversal of the position. The prices of British commodities abroad are immediately reduced, and foreign ones are made dearer in Britain: exports increase, imports decrease. However, the simplicity of this is countered in several ways. First, because it is a nationalist solution in a world of international competition, ether countries take similar steps. Second, it means that more goods are sold abroad but at lower prices. As Anthony Bambridge wrote in The Observer on 9th May: “Equally, although our exports are much cheaper and more attractive in world markets, we have to sell many more Marks and Spencer pullovers for every ton of iron ore we import.”

Third, the higher price of imports means further general price rises in Britain. It is calculated that every 1 per cent, drop in the exchange rate between the pound and the dollar adds 0.25 per cent, to retail prices in the shops, which gives an addition since the beginning of this year of 2½p. in the pound. Thus, rising prices are by no means cured by devaluation. A company report in The Times on 10th May observed this:

Mr. Tapscott [chairman of Lesney Products] voices a timely warning for exporters about the “dangerous drug” of cheap sterling. As a result of the new collapse in the pound, he declares, it will not be long before the company is paying much more for its imported raw materials and a further twist to the spiral of inflation is begun.

The additional fall of the pound in recent months has not been directly due to government action, of course. The price on the foreign exchange market is affected by companies’ efforts to anticipate developments and secure advantages in trading. The “loss of confidence” in the pound resulted chiefly from commercial selling by firms buying foreign currency for future import orders, and holding it for as long as possible in hopes of a profitable exchange. In this situation, news of the policies of the British government and other governments causes further ups and downs on the exchange market.

Paper Promises

Fundamentally, the depreciation of the pound is due to inflation. Because of the over-issue of paper currency, the amount of gold represented by a pound note has been reduced. This is the sole cause of the massive rises in prices since the war. Before the adoption of Keynesian policies by the governing parties, the issue of paper money was strictly controlled and prices remained stable apart from normal fluctuations. In the last thirty years this long-standing practice has been discarded. Governments have financed their expenditure by borrowing from the Bank of England and allowing more notes to be printed to maintain bank reserves of cash. The result is continuing depreciation of the currency, and inflation: which in turn has led to the devaluation of the pound, whether by government action or “loss of confidence”.

In a recent speech Sir Geoffrey Howe, the Tories’ “shadow Chancellor of the Exchequer”, appeared to know the answer: "Strict control of the money supply had to be an essential foundation of economic policy” (The Times, 13th May). However, he said the control would be restored gradually, and linked with a reduction in public spending and a wages policy. In effect, the Conservatives would follow those aims as far as capitalism allowed. The reducing of public — i.e. government — expenditure is an obvious necessity for dealing with inflation, but to contemplate it puts the Conservatives in the same dilemma as Labour: it means the cutting of education and other services, and the risk of losing electoral support.

Workers should beware of the statements made about inflation and the pound. Don’t accept the glib assumption that “the country” is the people as a whole, that the problems of “Britain” are theirs to overcome. These are the problems of capitalist commerce, whose vision of prosperity is limited to itself just as much as its cries of plight seek to embody everyone. Don’t accept either that inflation prices are caused by “excessive” wage increases. Wages are prices, produced and conditioned by the same factors as the prices of all other commodities.

Still more important, workers should not swallow the idea that if the pound were made strong and inflation overcome they would be far better off. A “strong” pound means a balance of payments surplus and the exchange rate restored to a level of former years, with British goods selling abroad not only plentifully but at higher prices. Imports would be cheaper, and the cost of living relatively lower. Given those circumstances, is it seriously imagined that the capitalist class and its governments would declare the time come for high living? On the contrary, if inflation is halted the present period will provide a myth of the awful consequences of letting workers have wage increases, and a standing argument against such profligacy in the future.

Workers and Wages

One of the purposes of the devaluation of the pound in 1949 was to avoid major struggles over wages between employers and workers. Though it had appealed for belt-tightening, the Labour government hardly dared to try to force down working-class living standards when the wartime and post-war “austerity” period had still not ended. The alternative was to cheapen prices abroad drastically, and hope that this would fill order-books and restore profitability for British manufacturers. In 1976, while the fall in the pound is having the same cheapening effect, the workers are having their wages held down too. Insofar as reductions in government expenditure are made, these can involve additional cuts in living standards, since subsidies and welfare service take the place of additions to wages.

The tragedy is that it is all for nothing. The economic crises of capitalism are not exceptional dire occasions, but its normal working. With or without inflation, and whatever the standing of the pound, the position of the workers is the same. Throughout the decades when there was no inflation and the map was pink, there were high unemployment and low living standards (the Daily Express in the nineteen-thirties advocated some inflation as a means of improving things). There is really no way out of the problems of the capitalist system — except to abolish it and have Socialism.

Robert Barltrop

T.U.C & the budget (1961)

From the April 1961 issue of the Socialist Standard

As happens every year the T.U.C's pre-budget recommendations have been placed before the Chancellor of the Exchequer, and as in past recommendations platitudes abound. It would appear that this year's remedy is economic expansion with an export drive, which the T.U.C. say is based on a need for long term planning. One would have thought that economic expansion was a job for the capitalist class and that the defence of workers' interests should be the main occupation of the T.U.C.

The T.U.C. added that for the export drive to succeed not only physical controls limiting less essential industries may be necessary, but that if these measures affect Britain's balance of payments the Government should take a “calculated risk” by controlling non-essential imports. The T.U.C.’s further warning was that although the measures suggested may be unpopular the alternatives could be worse. It would appear from all this that the workers have very little choice either way.

We must point out that the T.U.C.'s suggested measures have all been tried many times before. Since however the nature of capitalist production compels all other capitalist nations to introduce the same measures the contradictions of the system with all its disastrous consequences is made more obvious. The spectacle of the T.U.C. leaders ably assisting British Capitalism in its world rat race is an object lesson.

W. G. C.

Finance and Industry: Devaluation of the Pound? (1960)

The Finance and Industry Column from the October 1960 issue of the Socialist Standard

Devaluation of the Pound?

In the early days of capitalism the business men and economists invented the theory that if each capitalist got on with the business of selling goods and making profits production and distribution would flow smoothly and all would be well for everybody, including the workers. Like all such theories it was no more than their attempt to justify their profit-making activities against the critics and it became increasingly difficult to defend in face of the evidence that the flow was never smooth and at intervals was chaotically otherwise.

Then grew up the idea, from the same quarters, that with more study and the accumulation of facts and figures, capitalists and governments could foresee trends and avert unwanted developments. This, too, has proved to be a myth and a case in point is the frequency with which governments find themselves induced to vary the values of their currencies because of international trade difficulties. The point is that these revaluations are never the result of free choice. The pound has been devalued several times and now another devaluation is being discussed. The pound was once worth 4.86 dollars, then it was reduced to 4 dollars, and then, in 1949, despite the repeated denials of the British government, it was suddenly dropped to 2.8. And in the nineteen thirties Roosevelt cut the dollar to about half its gold content.

Now, Mr. C. L. Day, writing in the London and Cambridge Bulletin (supplement to the Times Review of Industry, September, 1960) gloomily forecasts the possibility that the low level of British exports will have to be met either by policies which will increase unemployment or by devaluing the pound.

The City Editor of the Daily Mail (7/9/60) concedes that Mr. Day may be right in his forecast because he "has an excellent record in this respect." but can derive no happiness from the prospect.

It may well be. But surely we can try a little harder and suffer a little more to preserve the value of our currency before we shrug our shoulders and admit defeat by devaluing the pound again—about the best way of making sure that nobody ever wants to hold pounds any more.

And, of course, the assumption that such a move would solve anything by giving a boost to exports depends on what other countries do; if world trade becomes stagnant they may all be doing the same, including the U.S.A. One forecast we can safely make is about the attitude of the government and employers if a devaluation is decided upon sometime: they will be urging the workers not to press for higher wages. In 1949 when the Labour Government took that step they knew that the effect would be to raise the cost of imports and raise the cost of living and Sir Stafford Cripps, Chancellor of the Exchequer, made his famous or infamous declaration that workers must not ask for more pay to meet higher prices.

Speaking in the House of of Commons on September 27, 1949, he said:—

"Especially and specifically there can, in our view, be no justification for any section of workers trying to recoup themselves for any increase in the cost of living due to the altered exchange rate. That is a general burden spread over all and must be accepted as a very real and essential contribution towards the avoidance of vast unemployment."

Fortunately the workers did not take much notice of his appeal: if it happens again they should in their own interest take no notice at all.

The Oil Industry 

Ever since Malthus there have been “experts” telling us that at some time in the future world resources will not be sufficient for the needs of a bigger world population, but none of them have been able to show that world resources have been insufficient in the past or present, or explain why capitalism has all along failed to meet the reasonable needs of the vast mass of the population. It is not nature, or lack of efficiency in production that is responsible, but the structure of the social system, which in industry after industry periodically produces too much for the market and too little for the needs of those who have not the money to buy. At present world markets are glutted with too much coal and too much oil, millions of tons of unsold coal, oil refineries working below capacity and tonnage of idle tankers running into hundreds of thousands.

The City Editor of the Sunday Times (21/8/60), Mr. William Rees-Mogg, tells how the oil situation came about. It is the old story of capitalists absorbed in their own problem of producing to make profit irrespective of what is happening elsewhere, of governments determined to promote their own oil industries no matter what the effect on markets, and planners making forward plans in the dark. Mr. Rees-Mogg lists four specific reasons:

"The first is that the Suez crisis concealed from the industry the fact that it had reached a stage of over-investment. At what should have been the top of the investment cycle another great wave of investment was added on. The second reason, and a most important one, is that the American oil companies looked abroad for oil to supply their home market: then the cuts on imports forced them to try to sell abroad what they had found abroad. During the 1950s it also happened that local nationalist feeling made each country want its own refinery; as a result there are too many refineries. Finally, nature was generous and oil exploration, particularly in North and West Africa, found enormous new fields.”

About the planners he writes;

The result is that there is more oil, more coal and more electricity at lower cost than anyone foresaw. As recently as 1956 the standard view, taken, for instance, in the Hartley Commission Report, was that there would be a general fuel shortage lasting as far ahead as could be foreseen. That has already been proved false.

Russia too!

In the early days Russian economists used to maintain that in that country self-sufficiency was the aim and production was planned for the needs of Russian industry only. Now Russian trade departments are busy scouring the markets of the world for outlets for surplus commodities, from motor cars to oil. A special correspondent of the Times (8/9/60), who holds the view that the trade drive is only partly political in its aims, quotes from a recent Russian novel what he accepts as a picture of what has happened:

"A Russian novel which has just appeared devotes a chapter to the embarrassment of local officials in the Volga oilfields who are faced with an unexpected abundance of oil for which insufficient outlets exist. This presents a new problem for Soviet planners. By long tradition, they are conditioned to urge the industrial chiefs on the spot to increase output to the maximum extent, rewarding them generously with bonuses for “overfulfilling the plan.”

The planners now appear to suffer from overfilled storage tanks, and measures must be taken to check the flow, which has consistently exceeded expectation. For example, the oil plan for 1960, as laid down in 1956, envisaged an output of 134m. tons, but production in 1960 is, in fact, likely to exceed 144m. tons. If these output figures are indeed unexpectedly high, they must have outrun the growth in refining and storage capacity, and it is reasonable to suppose that the foreign trade agencies of the U.S.S.R are under heavy pressure to dispose of extra quantities of Soviet oil abroad, additional to amounts which were originally earmarked for export. "

A sideline on this is provided by Mr. Stephen Parkinson, who recently led a delegation of British business men to Russia on behalf of the Institute of Directors. Writing in the Director (August, I960) he reports that the Russian officials they met “could not resist talking about greater trade possibilities and making one or two acid comments about their failure to sell Soviet oil to Britain’’—the British government has so far turned a cold eye on Russian offers to sell oil here well below the prices of the British and American companies.

Mr. Parkinson also had something to say about the Russian sense of humour which he finds is rather like the British. He tells of Russian officials he met: “Nor were they backward in pointing to what they considered to be the advantages of Socialism over capitalism, but it was all done with good humour and often to lighten the tedium of a long meeting.”

If Russian officials say, and Mr. Parkinson accepts, that Russian State capitalism is Socialism, it is funnier than any of them think.

Edgar Hardcastle

Finance and Industry: American Democrats & British Labour (1960)

The Finance and Industry Column from the September 1960 issue of the Socialist Standard

American Democrats & British Labour

In their economic policy and ideas on the way to deal with threats of unemployment there are many resemblances between the American Democrats and the Labour Party, and both have been much influenced by Keynesian theories. The following summary of the Democrats’ policy in the Presidential election, written by a correspondent of the Economist (6/8/60) could almost all of it have been written about the Labour Party and their slight differences from the Conservatives:

The Democrats assert that the past eight years have consisted of “ two recessions . . . .  separated by the most severe peace-time inflation in history,” and they blame the Administration's tight money policy for the present slackness in business. They blame credit restraint also for adding to the cost of servicing the growing public debt. The Democrats offer to end the tight money-policy and to set the economy moving forward at the brisk rate of 5 per cent, each year “without inflation.” How inflation can be avoided is not revealed in detail, although "a variety of remedies” is said to be at hand; since "monetary and credit policies properly applied" are among these, it is not clear how the Democratic policy would differ from the Republican in practice. The Democrats are, however, more willing than are the Republicans to counteract recessionary trends by prompt spending on public works and by temporary tax cuts.

It will be seen thal the Democrats and the Labour Party both favour low interest rates and a policy of cncouraging a greater expansion of production; and both accuse their opponents of having been responsible for inflation and high prices—forgetting how inflation went on when they were in power, up to 1951 in Britain and 1953 in U.S.A. Both parties believe that it is now within the power of a government to rule out for all time the possibility of a severe depression, and if anything approaching a severe depression does occur under Republican or Tory government it will be blamed on their perversity or ineptness.

Of course, experience of Labour and Democrats in office before the last war did not support their confidence about their powers. The British Labour Party came in with a promise to reduce unemployment (then at about 1,100,000) and saw it leap to 2½ million. In U.S.A. Roosevelt was elected in 1933 and seven years later unemployment in U.S.A. was still 14.3 per cent. (16.9 per cent., according to the American trade unions).

Exports

Mr. Macmillan has been exhorting business men to increase their exports and to cultivate what he called “export joy,” but he made it clear that what is wanted is an aggressive selling policy in overseas markets. As all the newspapers backed him up, as also did some trade union spokesmen, we may assume that selling more goods in foreign countries is generally considered "a good thing.”

But, elementary as it may appear to be, there are numberless people who write about trade who have never yet grasped that one country's exports are another's imports. So we read in the Sunday Dispatch (17/7/60) that many of the 400 of Britain's trade chiefs who are being urged by Macmillan to join in the fun of selling more abroad, could see nothing at all funny in the Japs "selling more abroad" in Britain. On the contrary, they ‘‘were seething yesterday as they digested the Jap pact," which "will flood Britain with an extra £3.000,000 worth of cheap Japanese goods." The ground for their anger was said to be the cheapness of the Japanese goods, against which British manufacturers could not compete—but it is certain that every additional ton of British goods sold in a foreign market through the export drive will work up some local manufacturer into seething indignation, too.

One commentator on Macmillan's speech (Daily Herald, 18/7/60) recalled that “this is the biggest ‘export crisis' session since the days when Sir Stafford Cripps went round the country exhorting British industry to make its post-war export drive." He might equally and more usefully have recalled an earlier speech of Sir Stafford Cripps, made during the war, when he said that “If . . . . we were to start once again the vicious circle of international trade competition we should be lost, and in a few years would be confronting another war."

World Food

Early in August a Freedom From Hunger Conference was held at Oxford under the auspices of the Oxford Committee for Famine Relief. Lord Boyd Orr, former Director-General of the U.N. Food and Agriculture Organization spoke, as he often has before, about the almost boundless possibility of increasing world food production:

If the nations of the world will cooperate, we can wash out the hunger of the world in ten years, and provide enough food for the increasing world population for the next 100 years." (Daily Telegraph, 2/8/60.)

He attacked the profit motive and complained that only in war-time will governments set out to provide food according to human need—at which lime, though he did not say this, they will also organize for destruction of life and property utterly without regard to cost.

The Assistant Director-General of U.N. Food and Agriculture Organization, Mr. Veillet-Lavallee, said that “there is now less to eat in the Far East than there was before the war,” and “in some parts of Africa 80 per cent. of the children are underfed or badly fed." (News Chronicle, 1/8/60.) He also stated that North America’s surplus wheat now amounts to 1,382,000 bushels a year and that it costs £350,000 a day to preserve the surplus which they hold because they cannot sell it.

Boom in land

For weeks the newspapers and politicians have been discussing the rocketing prices of land as more and more keen buyers chase after the shrinking acres available for use as building sites. Nearly ninety years ago Frederick Engels wrote a series of articles on the Housing Question for the Leipzig Social-Democratic paper Volkstaat. In them he had this to say about the situation then:

The growth of the big modern cities gives the land in certain areas, particularly in those which are centrally situated, an artificial and often colossally increasing value; the buildings erected in these areas depress this value, instead of increasing it, because they no longer correspond to the changed circumstances. They are pulled down and replaced by others. This takes place above all with workers’ houses which are situated centrally and where rents, even with the greatest overcrowding, can never, or only very slowly, increase above a certain maximum. They are pulled down and in their stead, shops, warehouses and public buildings are erected. Through its Haussmann in Paris, Bonapartism exploited this tendency tremendously for swindling and private enrichment. But the spirit of Haussmann has also been abroad in London. Manchester and Liverpool, and seems to feel itself just as much at home in Berlin and Vienna. The result is that the workers are forced out of the centre of the towns towards the outskirts: that workers' dwellings, and small dwellings in general, become rare and expensive and often altogether unobtainable, for under those circumstances the building industry, which is offered a much better field for speculation by more expensive houses, builds workers’ dwellings only by way of exception.

But what goes up sometimes comes down equally fast and some land booms end in a crash. There are reports already that much of the recently built office accommodation is not meeting additional demand but squeezing out existing older buildings. The Star (19/7/60) had the following about a land crash in Venezuela:

Just when there is a great to-do about soaring land values in Britain here is some news about a land boom that has gone bust.

Out in Venezuela they have had one of the biggest slumps in land values since the famous Florida crash in the 20’s.

Office blocks, houses and property in Caracas have come tumbling down in price with the growing inability of Venezuela to sell her glut of oil in world markets.

In Caracas landlords, who three or four years ago could demand almost any price for accommodation, are now virtually bankrupt. For most of them have raised huge loans on inflated values, which have disappeared over night.

According to the Star some of the depressed property in Venezuela was backed by British and American insurance companies.

Edgar Hardcastle

50 Years Ago: Floating to nowhere – the currency chaos (2023)

The 50 Years Ago column from the August 2023 issue of the Socialist Standard

If of course the dollars were convertible into gold at $35 an ounce as they used to be, nobody would fear to hold dollars. At present the dollar and pound are described as ‘floating’. All this means is that instead of being devalued and immediately fixed at the lower level they were devalued and allowed to fluctuate about the lower level.

The pound was devalued in 1967 by the Wilson government and again in 1971 by the Heath government — on the latter occasion with the enthusiastic support of Tories, Labour and the trade unions on the ground that it would make exports cheaper to foreign buyers and thus encourage production for export. The other side of the coin is that devaluation makes all imports correspondingly dearer. So the Labour Party and trade unions which protest against the higher prices of imported goods are protesting against the inevitable result of an action they approved of.

The governments and capitalists are becoming aware of the fact that while the depreciation of currencies may seem to be of short-term advantage, at least to exporters, the competitive depreciation of currencies such as the dollar and pound creates a chaotic situation which may make all international trading operations more difficult. This is leading some capitalists and economists to see that in the long run capitalism will have to re-learn the need to have stable currencies and that there is no better way than to restore gold convertibility at a fixed rate, in short the end of inflation.

And what does this offer to the workers? In nineteenth-century British capitalism there was no inflation. Prices in 1914 were actually slightly lower than in 1814. In between, prices rose moderately in booms and fell in depressions. And what the workers got was exploitation and poverty all the time, relieved somewhat in booms and worsened in depressions, with unemployment similarly.

Nobody has produced — or will produce — any policy which will change the nature of capitalism. Those who really do learn the lesson of history will concentrate on getting rid of capitalism.

(From the article 'Floating To Nowhere — the currency chaos' by Edgar Hardcastle, Socialist Standard, August 1973)

Australia takes guard (1956)

From the August 1956 issue of the Socialist Standard

A sure fire subject of conversation with almost any reticent Englishman in the summer of 1956, is the latest Test match score, and many a City gent, on bearing of another fallen wicket must have locked his office door and with his umbrella shown himself just how he would have put Lindwall away to the boundary.

Yet not all the headlines about an Australian “fightback” and “aggression” need refer to happenings at Lord's or Old Trafford, for in the pot of international disputes there is something of a trade war brewing up between England and Australia. The director of the Commonwealth Bureau of Agricultural Economics has said in Canberra that Britain's “attitudes, policies and behaviour” are “unfair” and “reprehensible” and among the mumblings of Australian politics is that of Mr. John McEwen, Minister of Trade, who has recently described his government as “hurt” by Britain's trading policies. Mr. McEwen, with a substantial press backing, is currently peddling a “get tough with Britain” line.

What are the reasons for this tetchiness in Canberra? First, Australia's trade with the U.K. is badly out of balance—in the nine months ended in March of this year she imported goods from Britain worth £A269 million compared to exports in return of only £A181½ million. Then there is the matter of wheat, of which Australia is one of the world's major exporters. The stockpiling scramble of the Korean war caused a vastly increased production of wheat and a consequent fall in its price. The end of the boom left Australia, growing some of the cheapest wheat in the world, with an unsellable surplus and looking sourly on the British policy of supporting home production on the one hand and preferring to buy Argentine wheat on the other.

Another source of irritation is the present state of trading preferences. In the Ottawa agreement of 1932 Britain and Australia agreed to grant entry to each other's imports at a lower duty than they charged on other countries goods. Australia accepted a preference based on fixed duties and the benefits of this have dwindled in our post-war inflation, just as money which was banked in 1932 has by now been devalued. But Britain secured a preference based on a percentage of their exports values and this has enabled her to keep a relative advantage on the Australian market. So a measure which was supposed to promote international friendship has turned out to be a cause of dissension; but there is nothing new in that.

To ease her problems Australia would like the U.K. to restrict imports of cheap wheat (unless, of course, it comes from Australia) and to re-negotiate the Ottawa pact so as to give Australian products new preferences. The difficulty in the way of both these suggestions is Britain's membership of G.A.T.T., whose rules forbid any such moves. Even so, Australia is pressing for a new. comprehensive Commonwealth trade agreement; this was one of the points raised by Mr. Menzies at the recent London conference of Commonwealth Prime Ministers. If Australia cannot gain any concessions here, she may, in return, take steps to end her status as Britain's largest single export market.

Meantime in the past few years Australia has several times drastically reduced its imports, the latest of these restrictions being introduced on July 1st. last. These cuts were designed to prune Australia's imports by about £32 million in a full year. In addition Australia is making a strong bid to capture as much as possible of the U!k.’s trade with New Zealand.

Another reason for the deepening rift between the two countries is the change in the strategic relations of the Pacific since the war's end. Before the sharpening of the Russo-American conflict Australia's military interests extended to the Middle East. Now that Asia is a centre of tension these interests have been forced back to the Pacific, where the gap left by Great Britain's waning power has been largely filled by that of America. Increasingly, Australia is dependent on the United States to keep intact her perilous existence between the great powers on the one hand and an almost indifferent Asia on the other. Whitehall gets hardly a look in.

Now the conclusion which we can draw from all this is that the much-boosted bonds of the British Commonwealth of Nations do not hold against the pressures of Capitalist competition and international conflict. Australia, as a normal Capitalist power, has trading interests which she will defend in any way open to her, even if that should mean offending her partners in the Commonwealth. For example, the recent import cuts came at a particularly bad time for the struggling British car industry but, as The Economist has put it, “trade cuts across politics.” Even the politics of the supposedly united British Commonwealth and with the government of the traditionally Empire-fostering Tory party bossing it in Whitehall.

Australia's position in the affairs of international trade and conflict was neatly depicted by Manchester Guardian cartoonist David Low just after the Foreign Ministers’ conference a couple of years ago at Geneva. His sketch showed a path bordering a lake and into the picture from the left ran Anthony Eden, dressed as a nursemaid, dragging behind him a pram full of tattered Union Jacks. As he ran he stretched out an imploring hand to another nannie, scampering off to the right with her pram. This one was identified as United States Secretary of State John Foster Dulles. His pram was labelled “American Sphere of Responsibility” and it held a lot of bonny babies of various Far Eastern nationalities. One of the bounciest, sucking a stick of striped candy, was called “Australia.”

Ivan.

Just a few more contradictions (1949)

From the July 1949 issue of the Socialist Standard

Socialists are always pointing to the stupidities and contradictions of capitalism, and capitalism certainly provides us with plenty to point to. Take, as a recent example, the agreement signed last month between Britain and Argentina, over which there has been so much fuss and bother. Under the terms of this agreement, which is scheduled to last for five years, both countries have undertaken to exchange goods to the value of £160 million. In line with her usual policy in these days of dollar shortage, Britain has stood out against using dollars for any part of her purchases and at the same time has insisted that the exchange shall be at parity, i.e. that Britain will sell to the value of £80 million in return for Argentine goods to the same amount. In order to get the meat she particularly requires, Britain has also promised Argentina priority treatment in supplies of oil, coal, machinery, chemicals, and other manufactured products, and will export them in sufficient quantities to satisfy most of Argentina’s needs.

So far, so good. On the face of it a useful trade agreement for the British capitalist class, and a triumph for their negotiators, acting, by the way, under the instructions of a Labour government.

But evidently everything has not turned out quite so rosily as expected, for now the United States has come along and objected in quite strong terms that the agreement is actually a very bad one, is going to have the effect of cutting out the United States from the Argentine market, and for quite a long time to come. American exporters, it seems, are most annoyed at all these developments and want their government to do something about them.

Now for the other side of the story. It is common knowledge that the United States has been pouring millions of Marshall Aid dollars into Western Europe as part of her foreign policy. Of these dollars Britain, as the most important Marshall Aid country, has received the largest share. The prime purpose of this aid has been to help the Western European countries to get back on to their feet economically, to assist them to increase production, and to step up their exports. Thus encouraged, the British capitalist class, aided by the Labour government, have energetically set to work (with the co-operation of the British workers), and made great strides in their trade, receiving numerous pats on the back from Hoffman, the Marshall Aid Administrator, for doing so. It seems, however, that Mr. Hoffman has been a little too generous with the back-slappings, for the British capitalist class are apparently carrying out the export policy too well. Having encouraged British capitalists to increase their exports, the Americans are now complaining that they are being cut out of the export market, and with the help of their own money!

There is another twist in the story. Even if Britain did not supply her with the goods she requires, Argentina would not be able to buy from the United States, because she has not got the dollars to pay for them. As it is, she owes America millions and millions of dollars for goods she bought years ago, and the Americans have been trying to get paid ever since. In spite of this, however, the American capitalist class are still prepared to have a row with Britain over the right to send even more goods to Argentina, still presumably without Argentina having the slightest chance of being able to pay for them!

Finally, we cannot resist making a side-reference to oil, one of the commodities involved in the agreement, and the one that is evidently causing the Americans the biggest headache. Only a few months ago, the Americans were still obsessed with the worry they get from time to time that their internal oil supplies were running low, and that they would need to draw to an increasing extent upon supplies from abroad. Thus one of the top priorities in the Marshall Aid programme was for the Western European nations to increase their refining capacity and sell oil to the United States for dollars, so killing two birds with one stone. Again British capitalists set to work with a will, to such an extent that “American companies have already lost part of their Swedish market to British competitors.” (Daily Telegraph, 11/6/49), and look like losing the Argentine market as well. No wonder they are getting upset! What has happened, of course, is that American home demand has been falling off, prices have been dropping, and American companies that thought they would be hard put to supply their home market are now finding it to be in danger of saturation, and that they had better look after their overseas markets while the going is good.

So here are three more problems for would-be solvers of capitalism’s problems to get their teeth into. Solutions should not be sent to us. Send them to the American State Department or Sir Stafford Cripps' or even to President Peron. They will be very glad to receive them, we feel sure.

Stan Hampson

Letter: Cheap Imports, Monetary Reform and Socialism (1942)

Letter to the Editors from the January 1942 issue of the Socialist Standard

We have received a further letter from the Duke of Bedford in reply to the observations published in our November issue.

Wigtownshire,

November 25th, 1941.

Sir,

I do not quite know why you assumed that my letter which you published in your November issue was an attempt to solve the contradictions of Capitalism. I was not dealing with either Socialism or Capitalism or the conflict between the two, but was calling attention to certain important facts relating to foreign trade and the relation of income to employment in a labour-destroying age.

When I spoke of the “true” purpose of industry, I meant the correct purpose under a sensible system. We are both agreed, though perhaps for somewhat different reasons, that the existing system is not sensible.

I agree that a “close association of work with the right to receive an income” is at present a characteristic of the working class, but seeing that the working class is an extremely important and numerous class, it stands to reason that any financial arrangement which does, or does not, provide them with adequate incomes is a matter which should receive the attention of any practical social reformer. As I have already pointed out, I was not in my letter “defending” Capitalism, but you are surely contradicting yourself when you first attack me for advocating a reform of the monetary system, which you refer to contemptuously as “currency juggling,” and then go on to say that if the reform I advocated were adopted, it would wreck the wages system through which the propertied classes were able to live on the backs of the wealth producers.

It is perfectly true that monetary reform such as I advocate would strengthen immensely the power of the weekly-wage earner to insist on receiving fair conditions of work and an adequate income. Speaking, however, from a very extensive experience of work for monetary reform and the controversy to which it gives rise, I do not find that the ordinary Capitalist opposes it because of the independence which he fears it would give to the weekly-wage earner. I do not say that this attitude of mind never exists, but it is decidedly rare and it is usually confined to the financier, or the controller of some great monopoly. The ordinary Capitalist, once he can be induced to give any serious thought to the matter at all, rid himself of the complex that he cannot understand finance, and see that he is not being invited to support inflation, usually rather welcomes a proposal which, as he sees it, will give him a better market for his goods, and at the same time, enable him to avoid trouble with labour disputes by making it possible for him to pay good wages to his workpeople. Rightly or wrongly he does not anticipate that workers will immediately go on to demand the control of the whole industry and equal shares in its profits.

Yours very truly,

Bedford..

Reply.

The essential difference between the Socialist attitude and that of our correspondent is shown in his statement: “I was not dealing with either Socialism or Capitalism, or the conflict between the two, but was calling attention to certain important facts relating to foreign trade and the relation of income to employment in a labour-destroying age.” Our correspondent’s proposals were that “cheap imports” should be allowed and that “new money” should be “created” and given to the unemployed. What he overlooks is that these are proposals to accept capitalism while modifying it in what he regards as a practical and beneficial way. They are not and cannot be proposals which will have any meaning under Socialism. Socialism is essentially international. Goods will be produced where it is convenient to produce them and transported elsewhere to be consumed, but there cannot be any question of sale, barter, etc. These are capitalist conceptions and cannot be Socialist ones. Indeed, our correspondent in his first letter (November Socialist Standard) writes saying that under his conception of a “rational system” “the foreigner is able to send us a large quantity of goods in return for a comparatively small quantity of our own.” What is this but the existing capitalist cut-throat system? How is it any more rational?

Regarding monetary reform, since under Socialism there can be no need for any monetary system, monetary reforms can only be reforms of capitalism.

Without going into the question of inflation except to say that we do not accept our correspondent’s view, it is necessary to point out another fundamental divergence of attitude. We said that if the penalty of semi-starvation were to be removed, the workers would be in a position to wreck the wages system. Our correspondent’s reply is that his proposal would enable the wage-earner “to insist on receiving fair conditions of work and an adequate income,” but that there is little evidence that the ordinary capitalist opposes this, though the financier or monopolist may do so. It all turns, of course, on the word “fair.” Our correspondent regards it as “fair” that the propertied class should continue to receive incomes derived from their ownership, though presumably he is prepared to see these incomes reduced.

The Socialist case is that the only rational system for the future of the human race is one based on common ownership and democratic control of the means of production and distribution which necessarily involves the elimination of all property incomes, whether in the form of rent, interest or profit. On this issue all sections of the propertied class have a common attitude—one of opposition.

Editorial Committee.

Letters: Are Cheap Imports a Concern of the Workers? (1941)

Letters to the Editors from the November 1941 issue of the Socialist Standard

We have received the following letter from the Duke of Bedford criticising the article “A Few Words on the Atlantic Charter,” published in our October issue:

“Wigtownshire, Oct. 18th, 1941.

Sir,

In your October issue you raise the question of the threat to Agriculture provided by cheap foreign imports raised in a climate more favourable to agricultural production than our own. In view of the fact that we live in a labour-destroying age, I feel that we need to modify profoundly the whole of our thinking on the question of cheap imports, realising that the true purpose of both industry and commerce is not to provide work, but to provide real wealth in the form of desired goods and services. The close association of work with the right to receive an income has led us to attach too much importance to employment and far too little to the provision of adequate incomes for all citizens, whether they are employed, or, through no fault of their own, unemployed.

The policy of excluding cheap imports with the object of assisting a home industry inflicts an injury on three sets of people in the effort to help one, and is, therefore, not sound policy.

The restriction of imports of cheap goods is an injury to consumers; an injury to the men in our export trade whose goods indirectly “buy” the imports; and an injury to the foreigner who may need our exports but cannot obtain them if we refuse to buy his exports.

If imports are cheap, under a rational system which recognises that foreign trade should have the fundamental nature of barter, it simply means that the foreigner is able to send us a large quantity of goods in return for a comparatively small quantity of our own, and this, if we did not live under the economics of Bedlam, should be an advantage to us and not a drawback. Under the present system, the snag of course is that if cheap imports put people out of work in one of our home industries, the unemployed will not be able to buy the cheap imports— and other articles—low-priced though they be. But why should such a ridiculous state of affairs be tolerated ? If the goods are there for the unemployed to buy and the unemployed are out of work through no fault, or culpable indolence, of their own, why in the name of reason should new money not be created and given to them to enable them to buy the goods and enjoy a decent standard pf living ! Such money would not be inflationary because there would be the cheap imports behind it to back it and give it value and, seeing that it would be new money created not in the form of debt, and not existing money obtained by taxation, no one else’s standard of living would have been lowered in order to assist the unemployed.

Yours very truly,

Bedford.”

Reply.

It is obvious that our correspondent has not at all understood the article that he criticises. We are concerned with abolishing the Capitalist system and replacing it with Socialism, not with the question of solving the insoluble contradictions of Capitalism. The purpose of mentioning one of its contradictions, the conflict between the agricultural capitalist who wants protection and the industrial capitalist who wants cheap imported food because that means lower money wages, was to show the difficulty in which the Labour Party or any other party finds itself when it tries to administer capitalism.

There are many points in the letter deserving of reply. For reasons of space it is only possible to touch briefly on some of them.

Our correspondent writes of “the true purpose” of industry and commerce, implying that there is a true purpose which is not the actual purpose. This is a meaningless statement. The purpose that industry and commerce have can only be the purpose of those who own and control them, and as ownership and control are vested in a small part of the population, the owners of landed, industrial and commercial capital, their purpose is the only one and that purpose is not the provision of wealth for the population but the purpose of deriving an income from their ownership. Different sections of the propertied class have different interests in the question of cheap imported food, but the working class as a whole have no such interest. Broadly speaking, their money wages rise and fall with rises and falls in their cost of living. Their interest lies in abolishing the private ownership of the means of production and distribution.

Our correspondent sees a “close association of work with the right to receive an income.” This is only true of the working class. The propertied class do not enjoy their incomes because they work but because they own the means of production and distribution and own the whcle of the products of industry. The reason why the workers, employed and unemployed, cannot have and consume more of the goods that are produced is not the one given by our correspondent, that “cheap imports put people out of work,” but that the owners of the means of production and distribution are the owners of the products and are not primarily interested in any other question than selling them at a profit.

Like many other defenders of Capitalism who think they can solve Capitalism’s contradictions by currency juggling, our correspondent writes in amazement that his fellow property owners do not see what appears to him to be a solution. He is mistaken. They know at least a little better than he does what would be the consequences of his proposal of “creating” new money and giving it to the unemployed. If the penalty of semi-starvation through unemployment were to be removed, the workers would be in a position to wreck the wages system through which the propertied class are able to live on the backs of the wealth producers. Our correspondent may consider his fellow property owners are being ridiculous, but they know they are safeguarding their privileged position.

In conclusion, let us repeat that we are Socialists, and our purpose is to achieve Socialism, under which system goods will be produced solely for use and there will be no rent, interest or profit.

Editorial Committee.

Ye Who Reap Shall Also Sow (1941)

From the August 1941 issue of the Socialist Standard

The problem of supplying the population of this country with food has become an extremely important one, because of the exigencies of war-time industrial production. Available shipping space is limited and has to be shared between armament materials and normal imports. To-day armaments receive priority. Imports of raw materials for manufacture and re-export take second place. As reported in the Daily Herald, March 6th, 1940 : “We are not free to concentrate all our strength in making munitions, because we must devote some part of our industrial resources, an increasing part, to the making of goods which will pay for the material out of which these munitions can in turn be made.” Consequently the amount of shipping space available for imports of food is considerably restricted compared with pre-war days.

Prior to the war enormous quantities, by far the greater part in fact, of Britain’s foodstuffs were imported : meat from the Argentine and New Zealand, wheat from the U.S.A. and Canada, butter from New Zealand, bacon and eggs from Denmark, tea from India, sugar from various countries, and so on.

By what process has this country arrived at a condition wherein so much of its foodstuff has to be imported ?

From the fifteenth to the nineteenth century Britain was transformed from a predominantly feudal agricultural country to the capitalist industrial power we know to-day.

With the growth of capitalism, and its inescapable need to make profit, there came the drive to find markets abroad for its products. Hence the growth of the British Empire and the colonisation of virgin lands abroad. In these lands which capitalism colonised it established itself as the economic mode of production.

The capitalists of Britain did not export goods to the Colonies and other lands for philanthropic reasons. The goods were produced to be sold at a profit, and, in order to obtain the money to pay for these goods, the buyers in other countries themselves had to produce and export commodities.

What happened in the “new,” countries? Was not wheat produced in North America, wool, meat and butter in the Antipodes? Did not the “Roast Beef of Old England” proceed to come from South America? Of course!

In the colonial and foreign countries it proved cheaper to produce certain commodities owing to the fact that not only was cheap labour power available, but the quantity of labour required to produce a commodity was less, owing to natural conditions, e.g., the great fertility and advantageous climate of the American wheatlands and the natural rich grassland and wide ranges of Argentina. Competition followed later between the individual capitalists in each respective country, causing improvements in the technical mode of production and thereby further lowering the values of the commodities.

With the development of Britain as a manufacturing country and the rise of various other countries as producers of agricultural goods, British agriculture entered its decline. It could not compete with the imports of cheap foreign produce.

Urging British workers to “Buy British and buy the best” could not stop the decline. Members of the working class, always forced to work for wages which suffice to buy little more than the bare necessities of life, could not do other than purchase them in the cheapest market, hoping to eke out the contents of their meagre wage packets, so that a small portion might be left to enjoy what to them were luxuries.

Sufficient has been said to demonstrate that the decline of agriculture in Britain followed and a necessary complement to the rise of British capitalist industry. Now let us consider the situation, during the present war and the hopes and fears of the farming community.

In its endeavours to provide an adequate supply of food, the Government, working through the various County War Agricultural Committees, has ordered the ploughing and cultivation of millions of acres of land which has lain idle for many years because under normal peace-time conditions it was not profitable to work it. The farmers may well ask if this is the dawn of a new day for agriculture, a sign of better times ahead. Agricultural wage-labourers may wonder if their jobs are going to be more secure and more remunerative than they have ever known. These are the questions that arise in view of the feverish activity displayed in the countryside.

An answer is provided in the following extracts from a book on economics entitled “Elements of Economics,” by S. Evelyn Thomas, B.Com. (Land.), (1932): —

“During the Napoleonic wars the shortage of foreign supplies of corn and the duties on imported corn forced up prices in this country, and led cultivators to resort to inferior land.”

“The return of peace in 1815, however, was followed by a decline in prices, and, in spite of the protection of the Corn Laws, agriculture suffered from acute depression.”

“The period of depression continued until the fifties and sixties, when the Crimean War, the American Civil War, and the Franco-Prussian War caused a reduction in the world’s supply of foodstuffs, thus forcing up prices and benefiting the British farmer, in particular, as imports into this country naturally declined.”

“The period of peace which followed in the seventies was accompanied by a recurrence of depressed conditions in British agriculture. Extensive wheat supplies from the prairies of the United States and of Canada were opened up owing to the improvements in transport and the building of railways. Such imports of corn led to lower prices, and lower prices forced out of cultivation the inferior areas.”

“The depressed conditions continued until the ‘Great War, during which British agriculture enjoyed a short period of great prosperity.”

“The close of the war and the inflow of foreign produce was followed by the usual conditions of depression.” (Italics ours.)

Capitalism has a persistent habit of holding out hopes to those who suffer at its hands. A typical statement——”Every effort to restore agricultural prosperity is being made by the central and local authorities and by other interested parties”—follows on the above quotations.

This statement is intoned like the promises by “our leaders” to-day of social security after the present war. Is there not a parallel between the periodic war-time prosperity and post-war depressions of agriculture and the war-time prosperity of industry and post-war conditions ?

Consider these quotations : —

“He (Mr. R. S. Hudson, Secretary to the Overseas Trade Department, now Minister of Agriculture) was announcing a plan for the complete reorganisation of British industry, so that a tremendous drive to capture world markets can be made.”—(Daily Herald, March 6th, 1940. Italics ours.)

“With European markets closed to them and faced with shipping difficulties, colonial producers have large stocks on their hands. Good progress has been made with plans to find alternative markets and to make arrangements for large scale storage.”— (Daily Telegraph, October l0th, 1940. Italics ours.)

“Planning for a New Britain: Agriculture: — Price control, marketing and general improvement of the agricultural industry will be framed. Trade : —Systems of control will be devised for exports and imports to allow the fullest possible expansion of world trade.”—(Daily Telegraph, January 7th, 1941. Italics ours.)

Observe the obvious contradictions contained in these statements and envisage the position of the capitalist class if and when it attempts to fulfil its plans.

Socialists are not concerned with maintaining the prosperity of capitalist agriculture. We realise that if there is prosperity from the ruling class viewpoint the workers do not necessarily enjoy a higher standard of living whilst such prosperity lasts. Despite all the wishful thinking and fanciful plans oi those who are interested, British agriculture is doomed to a post-war depression.

In “The Conditions of Economic Progress,” Mr. Colin Clark (of the Bureau of Industry, Brisbane) says: “No science has passed its apprenticeship until it is able to describe with confidence and accuracy the future consequences which will follow from present causes.”

Scientific Socialism has passed its apprenticeship. Our investigation of the agricultural problem in this country prompts us to state with confidence that capitalist agriculture holds no hope for the agricultural worker.

A. V. S.

Has British trade a future? (1926)

From the December 1926 issue of the Socialist Standard

(Continued from last month).

“Mr. Suma is to study the business conditions in East Africa, whose ports have never been visited by Japanese mercantile ships. The N.Y.K. and the O.S.K. have opened the new East Africa service in April with a view to promoting the business between Japan and East Africa. The Navy has advised the Foreign Office to send an official to East Africa in order to study customs, local circumstances, and economic conditions there aboard one of the warships, which the Navy Office has scheduled for the cruise along East Africa. The Foreign Office has been selecting the official since. The squadron is to leave Japan early next month, and will come back in January next year.” (“Osaka Mainichi,” 30/5/26.)

The “Bombay Chronicle” of July 23rd, 1926, quotes the “Japan Chronicle” of April 8th, 1926, to the following effect :—

“The “Asaki” reports that the scheme of the Foreign Office to further Japan’s economic development in Persia and the South Seas is making fair progress. The Supplementary Budget for the fiscal year 1926-27 includes an item relating to investigations into trade development in the South Seas involving Yen 24.299, and another item bearing on similar investigations in Persia and neighbouring countries to Yen 56.204. With regard to the investigation into economic conditions in Persia and neighbouring countries, it was started soon after Mr. Obata, Ambassador to Turkey, arrived at his post some time ago, and, judging from the results of the sample exhibition of Japanese exports which was held at Constantinople, it is hoped that it is not altogether impossible for Japanese goods to be exported to the Balkans, Asia Minor, Persia and Afghanistan, to the amount of Yen 100.000.000 a year. At a conference on investigations with trade development, which is to be held at Constantinople for ten days from the 20th inst., it is expected that recommendations to be submitted to the Foreign Office will be considered and adopted. These recommendations will furnish valuable materials for reference for those Japanese traders who wish to export their goods to those countries. In the meantime the Government is contemplating establishing Consulates where they are required for trade purposes.

As regards trade development in the South Seas, the Foreign Office is to call in Tokyo a conference of Consuls appointed to Calcutta, Batavia, Singapore, Bombay, Sydney, Manila, Hongkong, Haifong, Saigon, Rangoon and Bankok, at which will also be present the officials of the Departments concerned and business men chiefly interested in the South Seas’ trade. At this conference matters relating to Japan’s economic development in those districts will be thoroughly studied.”

At the moment, India is feeling very seriously the effect of Japanese competition, and the Bombay Millowners’ Association has submitted a statement to the Muf Board showing how they are hit by the competition of Japan. Extracts from this report are published in the “Bombay Chronicle” for July 20th and 23rd, 1926. The following excerpts are taken from the extract:—

“Japanese competition was severe, and in certain instances Japanese goods were offered at prices lower than the cost price of similar goods manufactured in India. . . .

…. The mill industry is suffering from the unfavourable rate of exchange with Japan and highly organised Japanese competition.

Japan, owing to her larger production of yarn and piece-goods for export has a much better balanced trade than India.

In piece-goods the position is much more unfavourable to India, the value of India’s piece-goods export trade to China being only about one-tenth of what it was ; Japan’s trade has increased forty or fifty-fold.

What strikes one most in considering the growth of Japanese competition is the amazing rapidity with which her imports into this country have gone up. It may be broadly stated that in 1914-15 the total imports of Japanese yarn into India were less than a million pounds, while in 1924-25, i.e., about ten years later, the quantity imported was more than 32 times the figure of 1914-15. Again, in piece-goods, the quantity imported in 1914-15 was about 16 million yards, and in 1925-26 it had risen to nearly 220 million yards.

. . . . . . . . . . . . .

It is this extraordinary rise every year in Japanese imports which fills with dismay the minds of everybody who has a stake in the cotton mill industry of the country. If the Japanese imports go on increasing at the present rate one hesitates to contemplate the plight in which the cotton mill industry of the country will find itself in about five or six vears’ time.

. . . . . . . . . . . . .

It is forgotten that not only is Japan dealing severe blows to Indian manufacturers in Indian markets, but she is making rapid inroads in the export markets. In the words of the Administration Report of the Bombay Presidency for 1923-24, “Since 1917 China has been practically a closed market for Indian piece-goods, owing mainly to the expansion of the indigenous textile industry and to the rigour of Japanese competition.”

India has practically lost her export trade in yarn, and since this yarn has necessarily to be utilised in manufacturing cloth, it is of the utmost importance to develop the export trade, but here again Japan with the unfair advantages she is enjoying over India is proving a very formidable rival, for not only has she ousted India from the Chinese market, but is rapidly capturing her foreign markets, e.g., Egypt, East Africa, etc.”

There is a pretty kettle of fish for Chiozza Money to stew ! The above quotations only deal with one branch of Japan’s activities, but it must be remembered that she produces the bulk of the world’s silk; that she is conscious of her shortcomings in the coal, iron and steel industries; and is making strenuous efforts to remedy them; that she has a cheap and almost unlimited supply of labour to call upon; and that in the matter of factory legislation, particularly with regard to hours of labour and female and child labour, she lags far behind the other advanced countries.

Japan’s neighbour China is in the industrial melting-pot. China is making strides in the way of producing to meet her own needs, and when she too commences to make a serious attack on the world’s markets— well, there will need to be some “reductions in the cost of production” to meet the twin eastern commercial menace !

To come down to the position from the worker’s point of view, we can see in the struggle for markets a terrific development in machine-production and elimination of human assistance in the production of goods. This would be very acceptable if the workers owned the machines, but as the employers own them, it means the elimination of jobs. Without jobs, no wages; and without wages, no bread—or the workers must decide that it is time they reaped the multitude of advantages accruing to those who own and control the means of production.

Gilmac.