Book review: Flies in the ointment. (1916)

Book Review from the September 1916 issue of the Socialist Standard

The New Protectionism, by J. A. Hobson, London. The Cobden Club, Westminster, and T. Fisher Unwin Ltd., Adelphi Terrace. 6d. Net.

That monumental piece of bluff and fatuity the Paris Economic Conference has been taken seriously, not by the German capitalists—-they are not entirely devoid of intelligence—but by the Free Trade apostles of this country. While almost everybody else has been laughing at the affair as a clumsy attempt to impress the mugs, not of the Germanic nations, but of the “entente” countries, the “economists” of the Cobden Club have been regarding the Conference as a sort of “red light,” and have even been moved in their trepidation to inflict upon an already sufficiently suffering world a 150 pages or so of very serious and solemn consideration of the matter.

That the recommendations of the Conference were ever seriously intended to be carried into effect after the war has been thought hardly worthy of space for discussion in these columns. It will be the wonder of the age if the “Allies” can hang together through all that they have yet to endure before they arrive at the goal of victory, or survive the conflict of interests at the settlement, much less bind up those clashing interests with fiscal bonds and the like. Those interests are by no means made one by the war. It is extremely doubtful, indeed, if those interests are unified even as far as a complete and crushing victory over the Teutonic powers.

Be it said at once that in the brochure under review the author adduces many cogent reasons why the attempt to carry out the recommendations of the Paris Economic Conference would be sheer idiocy. Having said that I have done with that side of the question. If any reader wishes to waste a tanner on those cogent reasons he has my gracious permission to do so, and incidentally he can have my copy for tuppence, with the comment chucked in that “the fool and his money’s soon parted.”

But if the Socialist is not concerned with the question of statesmen making asses of themselves by chewing “New Protectionism” thistles, he generally feels disposed to have a cut at bourgeois economics (!) when opportunity offers, and opportunity offers now.

Mr. Hobson opens thus :

“The policy of Free Trade is based upon a reasoned belief that all commerce is an exchange between the goods or services of one person and those of another, this exchange being usually effected by two monetary transactions an act of sale and act of purchase. both parties in such commerce are gainers from it: and their gains tend to be equal.”

Our author having firmly based his creed on the unshakable quagmire of an economic fallacy, proceeds to enlarge upon a “series of separatist fallacies,” of which

“the second is the separation of the interests of the seller from those of the buyer, and the false assertion that the interests of the former are, or ought to be, superior.”

If Free Trade is based upon the first-mentioned belief, then the Free Traders had better shut up shop, for the Protectionists have all the best of the argument. An exchange may be “two monetary transactions—an act of sale and an act of purchase” but there is a vast difference between the two. The seller of a commodity realizes profit, the buyer does not. The commodity is not produced for consumption, but for profit. This profit can only be realized by sale. The seller, then, is simply completing the process which finds its volition in the motive for all capitalist activity—the incentive of gain ; the lust for profit. Therefore, it is not true that both parties are equal gainers by exchange, and under the system the interest of the seller is the paramount interest.

As a matter of fact, of course, it is not at all necessary to believe that both parties concerned in an exchange benefit equally from it in order to become an advocate of Free Trade, and it is mere moonshine to say that the policy of Free Trade is based upon such a belief. The Free Trader who counts—the Free Trader among the ruling class—recognises the paramountcy of his interets as a seller, since he knows that in each cycle of his industrial operations—in which field the vast bulk of both his buying selling is done—he sells more than he buys, and this difference between what he buys and what he sells is the sole incentive of his buying and seeing at all.

He starts by buying raw material and labour-power, and he ends by selling the product of the combination of the two. And always, except in the comparatively rare instances where he has made a sad muddle of things, the amount of his sales exceed the amount of his purchases, else where does his profit come in ?

Free Trade is mainly the policy of the manufacturer who hopes to sell in foreign markets, and for these reasons : If he has to pay a duty on his raw materials he cannot recover it in the world market, hence he is handicapped as a seller ; i.e., he must either sell for more and consequently sell less, or he must sell for the same as has foreign competitors and himself shoulder the duty. In either case he realizes less profit. The second reason is that if his wage-workers have to pay a duty on their necessaries of life he, the employer, will have to pay more for their labour-power, and again when he sells his commodity he realizes less profit.

And now mark the working of the mind of the bourgeois Protectionist. He usually is producing for the home market. If he has to pay more for his raw materials because of a tariff, be can get that back in the protected home market, while if he has to pay more for his labour-power because of the tariff on his wage-slaves’ necessaries of subsistence, he calculates that the higher price and wider market Protection enables his commodities to enjoy will more than counterbalance that disadvantage.

The underlying motives, therefore, of both the Free Trade and the Protectionist policies are not any concern for the equality or inequality of benefit arising from exchange, but the desire to have established that system best suited to the economic of the individuals holding the respective views. And it may be said that the tendency is to protect the home market when that market is of greater importance than the world market, and to resort to Free Trade as the export trade is developed. In view of this we may expect to see a revivifying of the Protectionist policy as the development of the manufacture of the more backward countries brings about a relative restriction of the foreign market for every country.

In close connection with this phase of the question “Free Trade versus Protection” Mr. Hobson may be quoted again. He says on page 8 :

“If the Bradford weaver gets Protection and nobody else, he stands to gain. But if all other British trades, local and national, engaged in making articles he needs in his trade—e.g., wool, coal, machinery, dyes, etc.—or articles of food, clothing, furniture, on which he spends his wages, also get Protection, each duty to protect those other trades filches from him a bit of the gain he stood to make if the Bradford woollen trade were alone protected. A general tariff protecting all British trades equally would thus be found to make so many deductions from the value of the special Protection enjoyed by the woollen trade as to convert it from a gain into a loss. The higher prices of woollens which his Protection enabled him to get would be outweighed by the added higher prices of the various article required for use in his trade and for his private consumption.”

This, of course, is incorrect, as is easily demonstrated. Let us suppose “a general tariff protecting all British trades equally to the tune of, shall we say, 10 per cent. Our Bradford weaver buys “wool, coal, machinery, dyes, etc.” (much of which being home produce, he would not have to pay any duty on) value say, £100 prior to the tariff. He then purchases labour-power of the pre-tariff value of say £50. Even if we assume that the whole of the material had been subject to the tariff, and the labour-power had been produced entirely upon duty-bearing substance, the Bradford wearer would hare to pay on account of the tariff 10 per cent. on only the amount of his outlay, £150. But when he came to sell his commodity in the home market he would find his foreign competitor penalised to the extent of 10 per cent. of the full value of the commodity, which would he, say, £200. So against an penalty of 10 per cent. on £150 the Bradford weaver finds he has increased opportunities (so long as he sells in the protected market), in the way of increased sales and higher prices, equal to 10 per cent. on £200. “His private consumption” is by no means sufficient to materially affect this argument.

Again, on page 6, our author talks through his hat. He says of the Protectionist :

“He makes his separate appeal to the man as producer, tells him that selling is more important than buying, and that the money he receives is more important than what he can buy with it.

It is through consumption that the co-operative nature and value of commerce is realized.”

The crux of the whole matter is, who does the Protectionist appeal to, or, for that matter, who does the Cobdenite appeal to ? If to the capitalist, then it has already been shown that the capitalist is far more of a producer (in the controlling, not the operative sense) than consumer, and that it is to production that he owes all he possesses, which he realizes through the act of selling. It is logical, therefore to appeal to the capitalist as a producer, and both the Protectionist and the Free Trader are found to do so in the last analysis. Even Mr. Hobson does so when he says, “the higher prices . . which his Protection enabled him to get would be outweighed by the added higher prices of the various articles required for use in his trade.” On the other hand, if the appeal is to the workers, then it is about as logical to appeal to him as a consumer as it would he to try to interest a horse in the cost of his forage. Mr. Hobson assents to this when he states that the higher price of the worker’s “food, clothing, furniture, etc.,” “filches . . a bit of the gain” from the Bradford weaver.

There are plenty of other fallacies in the book under review, but I have room only to deal with one or two more. Mr. Hobscn says on page 4 that

“The notion that the expansion of foreign markets obtained within the last two decades by German or American traders is a corresponding loss to British traders is sheer nonsense. To a large extent those markets were “created” by the special economic and commercial activities of the German or American trader. For the rest, an enlargement of our foreign markets which, in default of German or American competition, might have taken place, would have involved a diminution of our home markets.”

What a conception of the capacity of the commodities market ! And what a conception of the modern capitalist power for production ! Mr. Hobson says it is a falsehood to represent the commercial competition between two nations as “a struggle between two nations for a limited amount of profitable foreign market.” He declares that “There is no such absolute limit to quantity of foreign market.” Yet our author admits that there is competition. It would be interesting to hear Mr. Hobson’s explanation of what that “commercial competition” is for, and how it arises. Nobody competes for that which is (in the practical sense) unlimited. It is limitation which is the very foundation of competition.

And then mark the ludicrous suggestion that it is productive capacity that is limited in that statement, “an enlargement of our foreign markets . . . would have involved a diminution of our home markets.” The army of unemployed means nothing to Mr. Hobson : the factories working short time or closed down are without significance to him ; the periodical crises, when the warehouses are choked with goods which can find no outlet in any market, at home or abroad, make no impression on his mind. One can go on producing to any extent, in our author’s view, and the problem of markets will solve itself. If the market does not exist you simply “create” it. The only danger is that, if you “create” much “foreign market” the home market will have to go short because capitalist production is so inelastic that it cannot respond to the call for expansion.

A. E. Jacomb

Editorial: Is the Living Wage sound? (1927)

Editorial from the March 1927 issue of the Socialist Standard

“The Living Wage” is a pamphlet written by H. N. Brailsford, J. A. Hobson, A. Creech Jones and E. F. Wise, and published by the I.L.P. It takes the form of a report submitted to the National Administrative Council of that party.

The opening chapter is entitled “The place of Wages in a Labour Strategy,” and is chiefly concerned with an attempt to strike a balance between the industrialists, on the one hand, and the political socialists, so-called, on the other. The latter, we are told, hope to tackle the problem of a living-wage, gradually, by nationalising, as occasion offers, the more essential industries one after the other.

“The New Leader,” 21.1.1927, page 7, devotes a column to proving that nationalised industries are run on business lines equal to anything under private enterprise. Expenses are cut down to a minimum, both in the number of employees and the wages paid. It would appear, therefore, that the I.L.P. have sufficient evidence to prove that the workers under nationalised institutions are no better off than those under ordinary capitalist concerns. At any rate, the enquiry now going on into the question of wages and conditions of Post Office employees should cause them to hesitate before accepting nationalisation as a means to raise wages or improve conditions for the workers.

But the writers of this pamphlet do not base their ideas on facts. To them nationalisation stands for Socialism, and Socialism stands for State control of all industries. According to them the workers remain wage-workers, living by the sale of their labour-power, whatever changes may take place; consequently they say :

“That to nationalise important industries in conditions which resemble those which prevail to-day would be a disappointing and even perilous proceeding.” (p. 3.)

We can now see the necessity for “labour strategy,” industries must only be nationalised by a Labour Government, when the possibility of raising wages will gain for them additional political kudos. How futile, even, such a policy as this would be is shown by the writers themselves :

“The industry of coal-mining is overmanned, and is carrying to-day a burden of surplus labour of anything over 100,000 men. A national administration would have to make its choice. It might maintain the uneconomic pits, risk the consequences of over-production, and continue to carry the burden of this surplus labour. In that case, it would either pay low wages or require a subsidy. The other alternative before it would be to close down the uneconomic pits and turn a big body of men adrift.” (p. 4.)

Exactly ! A Labour administration, neither elected for, nor understanding Socialism, would have to face the same responsibilities as the present capitalist Government. They would have to ensure the normal working of the system, including the exploitation of the class they pretend to represent. They could not excuse themselves for extravagance in administration because they have always preached economy in this respect in the workers’ interests. To the industrialists the writers say :

“Labour when it sells itself as a commodity in the market must usually accept a price which varies according to its scarcity.” (p. 6.)

While this statement is incomplete and unscientific in itself it is, nevertheless, an admission that wages are not determined by “public opinion” or “ethical principles that have been generally accepted.” In the body of the pamphlet there is a good deal of absurdity along these lines. All that kind of sentimental nonsense vanishes before their grudging admission that :

“In the last resort it is on the organised refusal of men to work for less than a living wage that our hope of securing it lies.’ (p. 7.)

It will be seen from the quotation in reference to coal mines that the writers appear to be impressed with the idea that capitalists are confronted with grave difficulties in the business of making profits. Hence a large portion of the pamphlet is devoted to assisting them with advice on (1) the reorganisation of industry, and (2) how to create a market.

It is now generally accepted that the enormous increase of unemployment in recent years is due to the extended application of machinery and labour-saving devices and methods. Yet the writers specifically stipulate that reorganisation of industry and mass production is a necessary condition of higher wages. They ignore the fact that in order to pay higher wages numbers of workers must be dismissed. They admire American methods, especially Ford’s, and seriously advise British capitalists to follow suit. They use the following figures as evidence of American prosperity :

“Mr. Hoover, in the annual report of his department for 1925, has published an official analysis of American prices and wages. Taking 100 as the index of the year 1913, he shows that wholesale prices had risen in 1924 to 150, while wages had risen to 228.” (p. 48.)

To understand the significance of this quotation we must first of all recognise that the workers’ improvement does not commence until his wages have reached the 150 mark. Moreover, he must buy his necessaries at retail prices, which will be much higher. The difference in 1924 was, therefore, only 78 minus the difference between wholesale and retail prices. However, this difference applies to the average worker when lucky enough to be employed. No account whatever is taken of unemployment and its increase resulting from the reorganisation. When reckoning the workers’ share of the national income, the writers should have expressed it as a proportional fraction of the total and not as the average wage of those workers lucky enough to be fully employed.

The facts regarding the Ford methods and the relation of production to wages were dealt with in the S.S. for December, 1926, and need not be repeated here. These facts show conclusively that mass production everywhere returns far less in wages per unit of production, and that it depends upon progressively doing this for its success as a business concern.

The contention of the writers that the higher wages of mass production constitute a market, becomes a myth when we realise that the total wages bill is actually reduced by this method.

The writers, however, do not rely entirely on reorganisation to bring about their eldorado. They have two further reforms. First, “An enlightened credit policy,” and second, “family allowances.” The object of the first, we are told, is to stabilise prices and employment.

“At the first distant signs of a slump, it must be the duty of the bank slightly to expand the volume of credit and to lower its price; at the first distant signs of a boom, it will gently apply restrictive measures. Our assumption is that in this way the price level can be kept steady, and the general level of employment constant.”

Their object is clearly stated. It is to wipe out the fluctuations in trade ; to reduce trade and consequently production and employment to its mean level. But there is no more water in the sea when its surface is calm than when it is boisterous. Trade is not increased by restricting it when it is inclined to rise and encouraging it when it flags. The volume remains the same. It is only the fluctuations that have been wiped put.

The second reform is easily seen to be useless as a means to increase the purchasing power of the workers. Capitalists and capitalist governments understand business methods too well to be induced to pay for the same thing twice over. If they keep the children by increased taxation through the State machinery, wages can be reduced to the cost of keeping man and wife.

This is clearly shown in the pamphlet under review. A scheme drawn up by an Australian Federal Commission is instanced. The Commission estimated the weekly sum necessary for a family of 5 persons to be £5 16s. When it was shown by the Federal Statistician that such a sum would absorb all profits, the Commission reviewed their figures and suggested a wage of £4 for man and wife with an allowance of 12s. for each dependent child.

Here, then, is an actual case, quoted by the writers themselves, where a Commission evidently favourably inclined towards the workers, did exactly what the capitalist would be expected to do. Moreover, it is obvious that the writers have this result in mind all the time. They say :

“It is important to note that family allowances provide the only hopeful method of realising the ideal of ‘equal pay for equal work’ as between women and men. There would, for example, be no reasonable objection to equal salaries for men and women teachers if the children of married teachers were provided for in this way.” (p. 26.)

In other words, the salaries of men teachers could be reduced to the level of women if they were relieved of the responsibility of keeping their children.

The net result of the three reforms : reorganisation of industry, stabilisation, and family allowances, so far as the workers are concerned, is a balance on the wrong side. Reorganisation increases unemployment, stabilisation does nothing, one way or the other, while family allowances merely reduce the employers’ wages costs.

But the futility of the reforms is nothing compared to the harm done to the workers by the publication of the work. Apart from the confusion it engenders, the real relations of capitalists and workers, the class antagonism, is glossed over and smothered. It puts on one side the opposing interests of the two classes and holds out the bait of a prosperous industry that will enrich capitalists and keep the workers fully employed.

It is an attempt to persuade the workers that it is possible so to reform the capitalist system that there will be no occasion to work for its abolition. Under mass production, stabilisation, and family allowances, the workers would find their interests identical with their masters’. Yet the writers of this work call themselves “Socialists.” If they have not written it with the deliberate intention of confusing the workers, they should begin at once to try and understand what Socialism means.

The condition of the working class. (1924)

From the August 1924 issue of the Socialist Standard

Can it be Improved under Capitalism.

According to the Tories, Liberals and Communists, the Labour Government have failed to show any initiative or ability in dealing with unemployment. The Labour Party pleads for time. Although it may be true that “the proof of the pudding is in the eating,” it is scarcely necessary for those who can use their brains to wait for the experiments of a Labour Government before passing judgment on them.

It is easy to take their reforms one by one and, examining them in the light of reason, see for ourselves exactly how much they are worth. It is doubtful whether all their supposed remedies can ever stop the increase of unemployment. They are more likely to achieve the reverse.

Such palliatives as afforestation, nationalisation and more economical use of coal, together with others that make for greater efficiency, while they may increase employment in their initial stages, will obviously become responsible for more unemployment as they become effective.

Palliatives like the Capital Levy—if they do what the Labour leaders surreptitiously tell the workers they will : take from the rich and give to the poor—will be resisted by the Capitalists to the last. The advocates of the Capital Levy, Labour and Liberal, however, have yet to prove that it would benefit the workers. Their next job is to convert the employing class.

For many years Labour leaders have urged the necessity of higher wages both from the employers’ and the workers’ view-points. Mr. J. A. Hobson, in the New Leader, June 20, declares that the remedy for unemployment is along this line. “All wealth not required as new capital, if spent, would give full employment. The workers must have wages sufficiently high to buy up the goods they produce when fully employed.”

Most workers would willingly agree ; but, unfortunately, Mr. Hobson does not tell us how to obtain such wages. There is not the ghost of a suggestion throughout the article whether the workers should strike for them, or whether the employers should freely give, after recognising the probability of big returns. He simply ignores these questions and merely tells us that if everybody had enough money to buy all they wanted after working, unemployment would vanish. He says, for instance :—

  “It is not true, as is sometimes urged, that there does not exist at any time enough purchasing power to buy and consume everything that is, or can be produced. For everything produced belongs to somebody, that is to say, somebody has the right to take and consume it, or its equivalent in other sorts of wealth. If everybody went on using all the income he received in purchasing consumable goods and services, as fast as possible, there would be no unemployment. But there would also be no provision for industrial enlargement to meet the rising demands of an increasing population.”

Now, the workers spend practically all their income on necessaries. The Capitalists, in their various concerns, set on one side the sums necessary for replacement and enlargement before declaring dividends, or calling for new capital. If they live up to their incomes, or invest a portion as new capital, matters but little, it is spent anyway; and spent “as fast as possible” and capital is always forthcoming for any concerns that promise dividends.

In spite of all this spending, wealth that cannot be used as capital increases in quantity in the hands of the employing class.

Mr. Hobson knows this quite well, for he says :—

  “A great deal of wealth cannot get produced because, if it were produced, it could not get consumed. Why? Because there is not enough purchasing power in the possession of those who would desire to consume these goods.”

A relatively small section of the working-class with modern methods and machinery, working at full pressure, can choke the world’s markets in a very short time. Who is to buy the goods? If the Capitalists buy them in order to keep the workers employed their action would be no more stupid than paying extra wages that their workers might buy them. From their point of view it would be more sensible to increase the dole.

If Mr. Hobson wishes to deal with unemployment, he must take things as he finds them. There is no escaping the fact that the employers, as a class, are solely concerned with preserving their present domination over the workers for the purpose of continuing their exploitation. Higher wages would undoubtedly temporarily improve conditions for the workers, but how are they to get them? Capitalists are too careful to allow Mr. Hobson to persuade them that the payment of higher wages would bring them more business. They are clever enough to stop production, or ease up, at the first signs of congestion. But they have not yet arrived at a stage where they can eliminate all competition and fix prices and wages at a level which would guarantee to them a definite proportion of the wealth produced. If they ever arrive at such a stage it is obvious that high or low wages will mean nothing to the workers because prices could be adjusted to any level in accordance with the old standard of living.

There is no form of industrial organisation that could raise wages to the level Mr. Hobson’s ideas would require. The employing class will only raise wages under pressure or necessity : pressure from the workers—where they have the power—or the indisputable necessity of raising the standard of living to produce greater efficiency. For these reasons Mr. Hobson’s remedy is impossible of application and, therefore, scarcely worthy of discussion in other respects. With every reform, brought to their notice by politicians of every school, the worker should always ask himself the question : will it work?

F. Foan

The Social Quacks On Revolution. (1920)

From the February 1920 issue of the Socialist Standard

The Economic Determinant.

In his masterly essay, "Causes of Belief in God," Paul Lafargue shows how the capitalist method of production divides society into superstitious capitalists and materialist workers. The buying and selling of stocks and shares are to the average capitalist a gamble. He knows little or nothing of the actual concerns. He often has friends who have lost heavily in dealings on the Stock Exchange. He receives rude shocks occasionally through rumours affecting his own investments, and not being able to control the conditions that bring success or failure, regards the whole question as one of chance.

The Worker's Earthly Wisdom.

The worker, on the other hand, is concerned with the material processes of production and distribution. He sees in these processes nothing marvellous because they are the result of the combined efforts of his fellow workers, and he himself takes a hand. Powerful engines, and the terrific force generated by them, have no terrors for the worker, because he controls them. His share of the industrial process, wages, is not subject to chance. They do not fluctuate from a standard of exquisite luxury to one of poverty; he remains always poor, not expecting, or even dreaming of, obtaining a fancy price for his labour-power. When the prices of necessaries are raised to him, he blames those who raise them. When his wages are reduced, his hours of labour prolonged, or the speed of the machine increased against him, he does not whine that it is the will of God. Neither does he try to explain such misfortunes by economic law. To him it is a personal matter and the capitalist is the person responsible; he therefore takes organised action against him.

The Chance for Dinkey-Doo.

The worker does not look for abstruse explanations of the economic disturbances that hurt him : he blames the capitalist. But the latter, sometimes hit by the same disturbances, blames his luck and tries to ward off disaster with mascots. He believes in lucky days, fortune tellers, and spiritualist revelations. When some mad professor of physical science predicts the end of the world because one side of the solar system seems overweighted with planets, the big luminaries of the scientific world rush into print to re-assure the wealthy idlers, who are in the main, just as void of scientific knowledge as the workers. The professors who ridiculed the idea knew they were safe in this case, because they alone would have been able to say "we told you so."

The Propheteers' Harvest.

When financial or trade crises ruin many capitalists, economic and social quacks get busy explaining causes; prophesying rapid recovery, and generally offering advice and administering comfort to those who are threatened with disaster. But it is when industrial disputes develop and spread from one occupation to another, when waves of discontent surge backwards and forwards, and the structure of civilisation seems threatened, when Bolshevism is triumphant in Russia and all middle Europe seems affected by it, then it is that the experts get busy explaining, warning, and advising their capitalist masters. Revolution is hinted at, prophesied for the near future, already here, and utterly discredited by politicians, economists, and social reformers with equally plausible arguments.

The Prime Minister says that "a revolutionary spirit in the air." In his usual self-advertising style he proclaims his ability to turn it. "It is simply the flood," he goes on, "the spade in the stream. What it wants is direction." Mr. Bonar Law said : "I am not afraid of the revolutionary spirit; revolution and the danger of it will come only if the social and economic conditions become intolerable." And of course they are not intolerable for these two gentlemen and the class they represent.

After them comes Mr. McCurdy, M.P., who says : "Not one man in a hundred of our strikers knows anything, or cares to know anything, about the philosophy of anarchism or syndicalism. He is looking for a way out of his own personal troubles—high prices, the irritation of profiteering, the limited share he gets of the comforts of life."

This is pleasant reading for the average capitalist, who wants to believe that the workers still lack the knowledge and intelligence necessary for combination against him on sound lines. But in his further remarks Mr. McCurdy goes far to prove that conditions are forcing the workers to become revolutionary.

"Higher wages," he says,"lead to higher prices, unless there is increased production." But, like all the advocates of greater production, he means greater production per worker, who cannot, therefore, get his better conditions, because prices will not fall until demand has contracted, which means increased unemployment and lower wages to correspond with the reduced prices.

The worker is never in a position ta take advantage of the redactions in price. Whether his wages are high or low, prices always soar at a level that prevents him attaining to a comfortable standard of living. Resolutions demanding drastic government action against the "profiteer" have no effect because profiteers are capitalists just the same as other capitalists not "lucky" enough to be profiteers, but hoping to be so shortly. The workers are baffled whatever action they take along the lines they have so far been accustomed to follow. But Socialism is at their elbows—will they pause and examine it ?

Another mistake that Mr. McCurdy makes is in thinking that Syndicalism or Anarchism are really dangers to the stability of capitalist society. Their real danger is to the working class, which, in so far as it heeds these things, neglects the obvious course of gaining control of the political machine, and lays itself open to militant suppression by the Government—a form of suppression the ruling class have proved themselves only too ready to adopt, many of them, without doubt, considering it necessary that society should be periodically purged of its revolutionary elements. And what more favourable opportunity could present itself than large numbers of workers imbued with the belief that they can carry through the Revolution by means of strikes or looting, or by physical force ?

It was this belief on the part of the Parisian workers that gave Theirs and the French capitalists the opportunity to massacre the communards; and that massacre will no doubt be repeated on a more colossal scale in Russia unless the Bolshevik leaders are wise enough to effect a compromise before the full weight of surrounding capitalist forces is hurled against them and their premature revolution.

The economist is an adjunct of the political party and manufactures arguments, principles, and even economic "laws" according to the needs of his party. When he speaks of revolution as the outcome of present working-class discontent he refers to it as a convulsion of society, with nothing to follow but brutal dictatorships or universal chaos. It would not suit capitalist ideas and interests to even admit the possibility of an alternative system of society. Capitalism, in the opinion of capitalists, is the highest expression of social organisation. Consequently the Russian movement and the general unrest, if it means revolution, is the beginning of the end: the annihilation of the human race through the absence of law and order.

In the "Review of Reviews" (Aug. 1919) Mr. J. A. Hobson says that the "scientific Socialist hails this intestinal warfare with a sombre satisfaction as the fulfilment of his law of economic determination." It is far easier to hazard sneering guesses about the emotions of Socialist opponents than it is to pulverise the "law of economic determination." though it matters nothing what the Socialist, or even Hobson, feels about it. if it is a law. Grudgingly he admits that the Socialist is right when he says that the development of capitalist society means the growing antagonism of the working class towards capitalism and all those who seek to maintain it. But his admission matters very little; the fact remains that "human society is out of harmony with its surroundings and must re-adapt itself in order to continue its existence." But to re-adapt itself means, not superficial, but fundamental changes, and Socialism alone contains such fundamental changes.

Mr. Hobson concedes to the Socialist the correctness of his diagnosis, and, therefore, admits the inevitability of the class war. But he asks, "need we succumb to this terrible philosophy ? I think not." And then he tries to comfort his friends the capitalists by assuring them that "the vast majority of the workers mistrusts all conscious formulation of aims and policy except for short range and concrete objects." These "concrete objects are, a voice in workshop control, security of tenure, a reasonable standard of comfort and leisure. "

But capitalism has always refused these to the workers, except in rare instances when labour-power has been in great demand. Wages must be kept down while industry is carried on for profits, consequently there must be an unemployed army which imposes on the work the competitive struggle for jobs and a reasonable standard of comfort and leisure is an impossibility under the system for all those who sell their energy for wages

Then Mr. Hobson shows how "short range" are capitalist "politics and economics." He is confident "that the great mass of the workers would accept these substantial gains and would not clamour for the destruction of the wage system" But he realises that "no present settlement on these, or any, lines would have permanency"—another admission that must give "sombre satisfaction to the scientific Socialist." 

Politicians and economists alike, with all efforts to bring comfort and assurance to their friends the capitalists, cannot conceal the pessimism they feel. They rack their brains for rough and ready arguments that will deceive the workers and bolster up a rotten system, carrying it on from day to day. They declare that revolutionary Socialists are small in number and that the mass of the workers are not affected. They indulge in cheap sneers at the founders of modern Socialism, and denounce the workers as the enemies of society when, driven by actual want, they strike for some slight improvement in their conditions. But they cannot explain, scientifically, the growing universal antagonism of the workers towards the ruling class.

There is an element of uncertainty about the growth of the Socialist movement. Not even the Socialist can tell how far the minds of the workers are turned to receive the principles of 
Socialism, or how many, already understanding them, are only waiting a popular movement basis on Socialism. The working-class mind, trained to materialism in industry, quite easily grasps the principles of Socialism when clearly presented. The avowed numbers to-day may be small but it is the soundness of the principles, and the ease with which they can be understood, and the growing realisation by the workers that their accustomed methods achieve nothing, that is driving them to Socialism. The capitalists' fear of the future is a convincing answer upon this point, while no Socialist has any doubt as to the future.

F. Foan

Socialist Brevities. (1929)

From the March 1929 issue of the Socialist Standard

Hey Presto!

Merlin and Cagliostrio were reputed to be the thing in wizards in their day. Of recent years the Welsh Wizard has eclipsed their old-time wonders. Ninepence for fourpence, for instance. But ninepence! What would you say to 2,666.6 ninepences for fourpence? Or, in good English, one hundred jimmy o’ goblins for fourpence! Not done, you say? Oh, well, you don’t read your newspapers. Besides, you do not realise the miraculous nature of the capitalist system. Read, mark, luke—I mean learn—etc., the following instance of modern necromancy as reported in the Daily News, 25.1.29:—

£100 for 4d.

  In the early stages of the Ner-Sag meeting, when the first revelations were made, but before they reached the Stock Exchange, a man rushed from the meeting to telephone his stockbroker (writes a City correspondent).
  He told them to sell 500 Ner-Sag shares which he did not possess. He sold at 17s. per share. He telephoned his brokers in the afternoon and told them to buy back the 500 shares to cover his bargain. He bought them back at 12/6 each.
  On February 7, the next Stock Exchange Pay Day, his brokers will pay him a little over £100.
  All that this “bear" operation will have cost him is 4d. for two telephone calls.

No wands, no incantations, no stinks, no ritual of any sort! All done by kindness. A wonderful system, capitalism!


Strange Bedfellows.

Wages seem to have got so high lately that they must soon be out of reach altogether. They are, of course, for some million and a half workers now. Yes, these “excessive” wages are an awful curse! This does not apply, however, to the “wages of superintendence,” or whatever the “economists” might call the “bunce” pouched by the non-workers.

There should be a law to stop paying wages altogether and let the workers eat one another. This would keep down the “surplus” population, I have little doubt. If you read the paragraph below, taken from the Daily Herald for 7.2.29, you will readily see that a substantial decrease in the wages of the worker would ease some of the unrest and discontent of the capitalists from which industry is suffering so acutely at the present time:—

BANKER WANTS WAGES CUT.

  But his Dividend is 18 per cent.

 Mr. Henry Allan, chairman of the Clydesdale Bank, moved at the annual meeting at Glasgow, yesterday, that the dividend on Ordinary shares should be 18 per cent., and then proceeded to complain of what he himself called high wages.
  Business conditions during the past year, said Mr. Allan, were disappointing. The unemployment figures showed a large increase. Unfortunately the remedy was very difficult. In the outstanding case of the railwaymen, high wages were actually fortified by Act of Parliament.
  The evil of excessive wages was aggravated by the general fall in prices which followed the return of the gold standard. Prices had fallen about 15 per cent. since 1924, without any corresponding reduction in wages.
  The 18 per cent. dividend was adopted.

Now, boys, let us all pull together and try to make that 18 per cent. into 1,800 per cent. !


Those Pampered Workers.

East is East and West is West
   And ne’er the twain shall meet-O!
Left is Left and Right is Right
   (With knobs), ditto repeato!

                                                   Anon.

What philosophical depths are plumbed by these lines! What fecundity of thought! But lately I have been assailed by doubts as to whether they apply always and without exceptions. “Liberalism,” for instance, whatever else it may be, I am told, is “Liberalism.”

Similarly, I suppose, “Labour” is “Labour,” and that might or might not explain anything or nothing, whichever may be chosen. But that Labour stalwart, J. A. Hobson, has been contending recently that there is no real difference between the aims and policies of the Liberal and the “Labour” Parties !

In an article in the Manchester Guardian (8.2.29) entitled “ Liberalism and Labour,” he advocates co-operation between the two parties on the grounds that the Liberal programme “presents a sufficient body of agreement with the adopted policy of the Labour Party to warrant thoughtful members of that party in looking favourably on co-operation.”

So, it would appear that although Mr. Hobson belongs to the Labour Party, “Hobson’s Choice” is not too well grounded. H. N. Brailsford and others agree with Hobson.

Now read the following extract from the article referred to :—

   The declaration of Labour in favour of “public ownership" of foundation industries, such as land, railroads, power, and banking, may seem at first sight a fatal obstacle to co-operation. But is there much substance in it? Labour does not propose to confiscate these undertakings. Its nationalisation would have to be financed by public bond issues, which for the most part would be taken in exchange for the existing share and debenture capital of the concern so “ nationalised.”
  Fixed interest would still be paid to the persons who had invested their capital in these undertakings. Would this differ appreciably from the Liberal proposal to leave the ownership of the undertakings intact, but to put them on a fixed interest or debenture basis?

Having now learnt what “ Socialism” is, I invite you to read what the Morning Post, in an editorial (11.2.29) has to say about this conception of Socialism —

  They (the Labour Party) have said a thousand times: “We do not believe in your 'capitalist' system yet they now propose to administer that “system,” and better, apparently, than those who do believe in it.
  We can understand the logic and appreciate the honesty of Socialists who seek office in order to establish Socialism; but we cannot understand the mental or moral position of Socialists who propose to take office in order to continue Capitalism. And we suggest to our readers to put these simple tests to. the professions and promises of our Socialist leaders. Do they propose to put Socialism in practice? If they do, do we want Socialism? If they do not, then why should we want them?

Isn’t this too cruel to the Labour Party! To be bombarded with the same ammunition by both the Morning Post and the Socialist Standard! No, I can’t believe those lines now!

Out Of Their Own Mouths.

On page 3 of the circular issued by the Labour Press Service great prominence is given to a statement regarding Unemployment Benefit (February 13th):—

THE HONEST UNEMPLOYED GET LESS 
CONSIDERATION FROM THE GOVERNMENT THAN CONVICTS DO.

The Government pays :—
£1 9s. 5d. a week to keep a convict in a Convict Prison.
£2 4s. 5d. a week to keep a convict in a Preventive Detention Prison.
£1 6s. 9d. to keep an offender in a Borstal Institution.
But it only pays—
17s. a week Unemployment Benefit to keep an honest workman who has the misfortune to be unemployed.
The Labour Party has repeatedly asked the Government to increase the amount of benefit for the unemployed.
The Government has refused all these requests, and has actually reduced the benefit of many of the unemployed instead of increasing it.

Then on page 4 we are informed how a Labour Government will tackle the unemployment “problem” :—

  Proper maintenance for the unemployed until re-absorbed.  Until they are re-absorbed into industry, a Labour Government would see that the unemployed are treated more humanely than at present. It would increase Unemployment Benefits to 20s. for men over 18, and 18s. for women over 18; it would raise the allowance for a wife or housekeeper to 10s. weekly, and the allowance per child from 2s. to 5s.; and it would make similar increases in the benefits of young workers.
  At the same time, by the discouragement of luxury spending and the direct increase of purchasing power in the hands of the workers, through better provision against unemployment, sickness, invalidity and old age, a Labour Government would increase the demand for staple commodities and powerfully assist the restoration of the chief industries of the country.

In other words, until the unemployed are re-absorbed into industry the Labour Government will pay to a man over 18 9s. 5d. a week less than it costs to keep a convict in a Convict Prison, £1 4s. 5d. a week less than it costs to keep a convict in a Preventive Detention Prison, 6s. 9d. a week less than it costs to keep an offender in a Borstal Institution.

Note how the Labour Government would “powerfully assist” the restoration of the chief industries of the country by disorganising some of the “chief industries”, of . the country—the “ luxury trades.” 

Providence, presumably, will be left the task of re-absorbing the workers in the luxury trades who would be thrown out of work by the application of the suggested remedy.

Sarcastigator.

‘Imperialism’: Where Lenin Went Wrong (2017)

From the May 2017 issue of the Socialist Standard

A hundred years ago last month Lenin’s pamphlet ‘Imperialism, The Highest Stage of Capitalism’ was published. We take another look at its defects.

In his introduction Lenin wrote that the pamphlet was based on the views of the English non-Marxist writer J. A. Hobson in his book Imperialism (1902) and those of the Austrian Social Democrat Rudolf Hilferding in his Finance Capital (1910). Hilferding, basing himself mainly on German experience, described how banks, through what would now be called their investment banking side, had come to merge with industrial capital, raising capital for them and not only charging for this but retaining a share for themselves. Hobson, who was an underconsumptionist, argued that what had led to imperialism, as investment and territorial expansion abroad, was a surplus of capital that could not find a profitable outlet in the home country.

Lenin combined these views to come up with a definition of imperialism as ‘the monopoly stage of capitalism’ where ‘finance capital’ as the ‘bank capital of a very few big monopolist banks’ had ‘merged with the capital of the monopolist combines of industrialists’. Accepting Hobson’s surplus capital theory, Lenin said that ‘monopoly capitalism’ led to the formation of ‘international monopolist capitalist combines which share the world amongst themselves’ and to the ‘territorial division of the whole world among the biggest capitalist powers’.

This was a passable description of some aspects of capitalism at the time, especially in Germany, and Lenin’s was correct in seeing the First World War as a war over the division of the world amongst the biggest capitalist powers. On the other hand, his acceptance of Hobson’s theory of surplus capital as an explanation for the ‘export of capital’. ie overseas investment, was dubious. A more straightforward explanation for the capital being invested abroad would be that it was more profitable to invest it there rather than at home.

Lenin was also mistaken to see the German-style merger of bank and industrial capital as ‘the highest stage of capitalism’. It was a common view amongst the Social Democratic parties at the time that capitalist competition would lead to monopoly and that what socialists had to do was to take these into common ownership and re-orient production to satisfying people’s needs rather than for profit. Karl Kautsky had speculated that the process of monopolisation could lead to a single world trust and a non-aggression arrangement between the imperialist powers, which he called ‘ultra-imperialism’. Lenin had a point when he said that this was impossible as the powers would never agree on a permanent carve-up of the world but would seek to change this as their respective strengths changed. But he failed to see that this applied to ‘monopolies’ in his ‘imperialist’ countries. The capitalist class there was not a monolithic bloc but different sections had different interests and none wanted to be held to ransom by some monopoly. Hence ‘trust-busting’ legislation in the US and nationalisation and the threat of nationalisation in Britain.

True to his polemical style, Lenin attributed a motive to Kautsky, accusing him of advocating a peaceful, united world capitalism even though Kautsky had only envisaged ‘ultra-imperialism’ as a theoretical possibility. Lenin posited a link between the ‘opportunism’ of which he accused Kautsky and ‘imperialism’, arguing that the reformism of the Social Democratic and Labour parties of Europe was due to the ‘imperialist’ powers using a part of their ‘high monopoly profits’ to bribe ‘certain sections of the workers’ into supporting both reformism and the state in which they lived. After the Bolshevik coup d'état this was developed into a full-blown theory that the top layer of workers in the countries with colonies had been bribed to support capitalism out of the super-profits of colonial exploitation and that the independence of colonial territories would undermine this, with the result that, deprived of their share of the super-profits, the workers there would abandon reformism and become revolutionary.

This was mistaken on a number of counts. First, it goes against the Marxian theory of wages that wages are the price of what workers sell and that higher wages reflect higher training and skills, not any share of surplus value as Lenin implied. Second, it led to supporting the creation of new capitalist states to the benefit of a local capitalist class. Third, it assumes that workers would become less reformist if their standard of living fell.

Lenin himself mentioned an objection, which he attributed to the anti-war Menshevik Martov, that the situation for socialists would be pretty hopeless ‘if it were precisely the best paid workers who were inclined towards opportunism’, e.g. skilled engineering workers. Lenin’s reply was, typically, to accuse Martov too of defending opportunism and reformism.

If the Bolsheviks had not retained power in Russia this work would have remained an obscure, dated pamphlet. However, due to Lenin’s position and later quasi-deification, it became inflated into a serious work of research and theory. The result was that its mistaken ideas – especially about some workers sharing in colonial exploitation and that socialists should support the ‘anti-imperialism’ of rising capitalist classes – became more widely accepted than they otherwise would have.

Adam Buick

Editorial: The Wages of War. (1915)

Editorial from the February 1915 issue of the Socialist Standard

Now that the glamour of glory and the frenzy of patriotism have evaporated somewhat and the east wind of Imperialism is becoming less satisfying, the workers may well pause to consider the serious problem of impending starvation.

The price of food and fuel rises, and the wages bill falls. It is an anxious question, too, for our masters, and one that becomes more serious as the cost of living mounts higher and the volume of jingoism declines.

That our masters will voluntarily deal with the matter only the politically blind will for one moment imagine. The Government will rush to the assistance of the shipping shareholders, who have taken advantage of the crisis more, perhaps, than any others; they will recompense owners for the destruction of their interest producing property, if destroyed by enemy warships; they will stand by the big banks and the vested interest generally; but the workers, hit the hardest because they have no reserve to fall back upon—they get short shrift indeed.

If ever adequate steps be taken to restore the standard of living to the normal, they will not be taken until it is feared that the hungry populace will become dangerous and threaten internal trouble.

With all the optimism of the Press and the glib assurance that “our” food supply is safe while Britain rules the waves the facts point clearly to a period of starvation in store for those who, in the best of times, are always short of the necessaries of life.

The August returns showed a drop in the aggregate of wages of 30.5 per cent., and a further fall of 11.4 percent. was recorded in Sept. October returns a recovery of 6 per cent., while November wages are still 5.5 per cent. higher.

Mr. J. A. Hobson ("Fortnightly Review," 1.1.15) records it as a serious fact that “the aggregate of wages at the end of November stood at 11.4 per cent. less than a year ago” The aggregate of wages is a far more important measure than either the figures of unemployment or the returns of rates of wages in a question of the standard of living, and in conjunction with this serious falling off in the average income of the worker must be taken the enormous increase in the cost of living.

The same writer says:

   "After the sharp rise in the early days of August prices of fool fell until by Sept. 12th they are found to reach a level of about 10 per cent. above July. Since then prices have been again rising, being. at the beginning of December, 17 per cent. higher than the July level in towns and 15 per cent in the country.”

Since then prices have mounted higher and higher, the most conservative figure being given by the “Board of Trade Gazette" (Jan., 1915) as 18 per cent. increase for December over the July (pre-war) prices.

The greater part of the workers' expenditure is upon food, but a large item is fuel. All kinds of fuel have increased in price. According to a circular issued by the South Metropolitan Gas Co., the contractors' charges on the transport of coal is equivalent to an increase of 10s. per ton, and whether your beverage be tea or beer, that too will "cost you more."

To that “third of the population continually on the verge of hunger” the conditions implied by these figures mean privations undreamed of by fair and foolish females who slobber over the horrors of war and help save a parsimonious government's expenditure, and incidentally starve some working girl by sewing shirts for soldiers in the trenches. If the pinch is felt now, while the "war trades” are booming, and the price of bread rises so readily while we are assured that there is more than sufficient wheat gathered and growing to supply the wants of the world, what will happen when the inevitable slump arrives, caused by the slackening in the production of war material and by a real scarcity of the crops to be gathered? The workers of the world will then receive in full measure the reward of war.

The Capitalist Never Learns. (1932)

From the July 1932 issue of the Socialist Standard

For two-and-a-half years the world has been in the throes of a severe business depression. The consequences of that depression have been far-reaching. Unemployment has mounted to fantastic heights, until to-day about 30 million workers in the leading countries are unable to find jobs. In fact, the world-wide incidence and growth of unemployment are so pronounced that even those who but a short time ago were seriously alleging that unemployment was due to the unemployed being too lazy to work, if the chance to do so were offered to them, have been effectively silenced. Nobody now pretends that there are jobs waiting round the corner, and that it is only love of lining up in a queue that keeps workers on the “dole" or the bread line. There are no jobs, just as there are no markets for the thousand and one commodities produced by industry and which the producers find they cannot sell. Plant stands idle just as men and women stand idle. If there are 300,000 miners in Great Britain who will never again be employed to go down a pit, there is likewise redundant plant of all kinds which will cease to be operated. The only difference is that capitalism has to feed its redundant workers in order to avoid trouble; its redundant plant it sooner or later scraps. For examples of this scrapping of plant, it is sufficient to refer to the Lancashire Cotton Corporation, Ltd., and National Shipbuilders' Security, Ltd. The first of these companies was incorporated in 1929 on the initiative of the Bank of England. According to a prospectus published in “The Times" of March 26th, 1931, “the aim of the Corporation is to acquire between 9 million and 10 million equivalent spindles, and it is intended that production shall be concentrated in the most efficient mills . . . the remaining mills being scrapped." The National Shipbuilders’ Security, Ltd., was also begotten by “the Governor and Company of the Bank of England.” It was incorporated. “for the purpose of assisting the shipbuilding industry by the purchase and dismantling of redundant and obsolete shipyards . . .  and the re-sale of the sites under restriction against further use for shipbuilding" (see prospectus in “The Times" of January 21st, 1931). It is a pretty commentary on a social system that it has to devote new savings to the destruction of existing capital equipment because it has too much!

Not only has capitalism come up against the problem of surplus workers and redundant plant, but it is struggling to live down the effects of a too bountiful Nature. Vast areas in America are being thrown out of wheat cultivation, cotton acreage is reduced, Brazil is burning coffee, and wondering whether all her efforts to get stocks down to an “economic level" will be nullified by a bumper crop in 1933-34, sugar cane is not being cut in Cuba, oil wells are shut down in nearly every field, copper output is restricted, as is that of nitrate, the stocks of which equal three-and-a-half years' consumption. The list could be extended to include practically every raw material, but these few examples will suffice to show that want exists to-day, not because there is too little but because there is too much. All that is lacking is the opportunity to make profits, and because of this workers and plant stand idle, misery is widespread, and since Nature will not withhold her gifts they have to be refused or dissipated.

Under conditions such as these, which if we had not experienced them might be unbelievable, it is not surprising that universally the question is raised: “What has caused this crisis? What is its cure?” If the answer given to this question is to be of any value, there must be brought to the consideration of the subject an historical knowledge of previous crises. Such knowledge is conveniently provided by the late H. M. Hyndman's “Commercial Crisis of the 19th Century,” published in a new edition with a preface by J. A. Hobson (Allen & Unwin, Ltd.: 3/6). This book is probably the best Hyndman ever wrote. It is a classic of its kind; it has always been so recognised in interested circles. No one who wishes to understand economic development during the nineteenth century can afford to ignore it. It undoubtedly has its defects. The chief of these is a certain scrappiness in the treatment of the subject. In a work which attempts to cover so wide a field in less than two hundred pages, incompleteness is, however, inevitable. One thing for which the reader will search its pages in vain is, as Hobson points out in his preface, an explanation of why a system of production based on profit-making “expresses itself in a recurrent failure of demand to keep pace with supply.” Nevertheless the book is exceedingly useful, particularly at the present time. Hyndman confined himself to an “historic account of these successive failures.” He succeeds sufficiently well in his purpose for us to be able to agree with the statement, made in Hobson's preface, that “those who witness to-day in almost every trade and every country masses of idle workers facing idle machinery and untilled fields will be disposed to give close and serious consideration to Hyndman's declaration that 'the capitalist class has virtually declared its own inability to conduct the business of the community.' ” In those words of Hyndman are summarised our case against capitalism, and our justification for urging the workers to become Socialists.

It is usual to hear the present crisis spoken of as being unique. It is explained as being due to reparations and war debt problems, the hoarding of gold by Central Banks, the failure of creditor countries to lend to debtor countries, and again in the same quarters as being caused by over-borrowing by debtor countries. Economic nationalism and the raising of tariff barriers are blamed to a greater or less extent. Finally, every explanation involves a reference to the stultifying effects on business of the fall in prices. The explanations are as numerous as the suggested remedies, of which the most popular are those which aim at raising the price level through manipulation of the currency. In this group of proposals fall the suggestions for the introduction of bimetallism, managed paper currencies, and international monetary conferences. Only a slight knowledge of economic development during the past century is necessary to show that far from being a unique phenomenon, the present crisis is of the same kind as those of the past, and that the so-called "explanations" only repeat the explanations put forward by the men who lived through the crises of the nineteenth century. Further, the remedies now proposed merely represent a refurbishing of old ideas.

Certain unimportant characteristics of each crisis are, of course, particular to the crisis concerned, but in their broad outlines, all crises present the same features. The resemblance between one crisis and another even goes to the point, of those who live through any particular crisis, imagining that it is something entirely different from anything that has gone before, and of those of them who advocate remedies always thinking that the adoption of their proposals will prevent the recurrence of crises in the future. But just as a war to end war only sows the seeds for another war, so the melting away of a crisis in a burst of renewed activity only prepares the way for the next crisis. Until that fact is clearly realised, the true cause of a crisis cannot be appreciated, for not until then will it be seen that the fundamental cause of all crises must be the same. This is to say that it must be a continually operating cause, and cannot be something, such as reparations or war debts, particular to the individual crisis. Such special factors may, of course, intensify a crisis when it comes, delay its solution or help to determine the time of its occurrence. Their responsibility for causing it cannot be carried further than that.

Crises are inherent in the capitalist system of production owing to the fact that production is based on the principle of profit-making, not on that of satisfying needs. Goods are produced in order to be sold at a profit. When trade is booming productive capacity is extended in order to increase the opportunities to make profits. New plant is installed, new sources of supplies of raw materials are opened up to enable the output of finished products to be increased. Competition between producers to secure the lion’s share of the profitable markets leads to production being extended further and further. Finally a point is reached when the supply exceeds the demand. Markets are glutted. Production has to be curtailed, first in one sphere and then gradually in others. Prices fall as stocks are unloaded. Workers are dismissed, and as their wages cease the demand for commodities further declines. The spiral is then leading downwards to business stagnation, bankruptcies and widespread unemployment. The boom has dissolved into a depression. There is a crisis. Then in time stocks run off, there are a number of bankruptcies, demand revives, and the mad dance through the figures of boom and slump goes on again.

This is a brief description of the course and cause of all crises. Any attempt to explain or deal with a crisis that ignores the profit-making basis of capitalism ignores essentials, and can only deal with what are, more or less, irrelevancies. Once it is realised that crises arise because the object of production is the making of profit, all remedies, such as those for currency reform, of which so much is now heard, must be dismissed as futile. As they fail to take account of the fundamental cause, they cannot hope to prevent its operation in the future, whatever temporary relief they may afford. The only means by which economic crises, such as the present, can be permanently banished from the world is by the overthrowing of capitalism. Until the present system of society is superseded by one from which profit-making has been eliminated, crises will, and must, occur periodically.

A study of past crises by revealing the correspondence in events between them and the present crisis will help to put the popular explanations and suggested remedies for to-day’s depression in their proper perspective and to demonstrate the truth of the assertion made above that crises are inherent in the capitalist system of production. Here it is impossible to consider the crises of the past in detail. That has been done by Hyndman, and readers are recommended to study what he has written on the subject. Certain features of past crises will, however, be discussed so that the similarity between present and past events may be demonstrated.

Before doing this, however, it is worth referring to one aspect of economic crises which is too frequently overlooked. To appreciate the real significance of an economic crisis it is essential to realise that what takes place in a time of crisis over the whole business field and in several countries is taking place continuously locally and in particular spheres of business. In some industry or place, plant, workers, and commodities are always proving to be redundant, as the supply of the particular commodity outruns the demand. It is when this condition becomes general and pronounced that the disease is glorified with the title of crisis and the general manifestation is treated as some rare event. 

B. S.

(To be continued.)

Part 2 here.

The Influence of Machinery upon the Working Class. (1912)

From the January 1912 issue of the Socialist Standard

J. S. Mill, to the surprise of the Radicals. said that it was “questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being. They have enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes.” We of the Socialist Party have always held that labour saving devices have not lessened the sum total of work that is done by the workers, or increased the remuneration they receive for that work.

This position we defend against “cheery” social reformers who contend that machinery has had a beneficial effect upon working class conditions; that it has brought us nearer to a heaven upon earth.

They assert that machinery has (1) shortened the working day, (2) abolished heavy and wearying work, (3) educated the worker by giving him intricate machinery to mind, (4) lowered the price of commodities, (5) whilst negatively it is contended that it has not made employment more irregular, nor caused any considerable amount of suffering by disturbing working conditions when applied to new industries. All misery attendant on machine production is due to Free Trade, or Protection, or Land Monopoly, or some other Will-o’ the Wisp.

Machinery, says the Liberal, has deepened the working man’s chest and increased his stature by shortening the hours of work. When he says “shortened hours” we promptly ask “compared with when?” And as promptly comes the answer : “In comparison with the hours worked in the ‘hungry forties,’” or “when my grandfather was a lad.”

To compare present hours of work with the length of the working day in that transitional period when capitalism was in its birth throes (with the aim of extolling the difference) is an inane procedure.

Thorold Rogers has shown the comparative leisure of the worker under the system of “small production”—with that we need not deal. If we take our case at its worst and compare hours of work to-day with the hours toiled in the early years of capitalism, we find justification for our case. We find that side by side with the shorter working day has come a quicker pace, a more rapid rate of production, a faster consumption of working-class brain, nerve, and muscle. Whether it be in the sphere of production—at lathe or loom, or in distribution on train, tram, or taxi, the working pace is fierce.

Even if we examine types of work where steam-power cannot be applied—office routine and the like—we find mechanical appliances such as calculating machines, typewriters, dictating appliances, etc., adding to the intensity of the workers’ grind.

The spheres of production and distribution are worked at such a pace that even porters and packers and carmen and shopworkers and the like are affected by the pace which permeates from the departments where machinery reigns as God. The change from the leisurely life of the 17th. century to the horrid bustle of to-day is a change so scenic, so grim, so fraught with great possibilities and fearsome forebodings, that one’s brain whirls at the revolution — and one smiles at fussy politicians and dozy economists. Machine production under private ownership has rendered futile the behest to “love thy neighbour” and ushered in the modern cry: "Get on or get out!"

Economists tell us that machinery is abolishing heavy and “very laborious” work. But whilst machinery has a tendency to make work less “ muscular,” we must not forget that (as J. A. Hobson puts it): “As regards those workers who pass from ordinary manual work to the tending of machinery, there is a good deal of evidence to show that, in the typical machine industries, their new work taxes their physical vigour quite as severely as the old work.” And: “A lighter form of labour spread over an increased period of time, or an increased number of minor muscular exertions substituted for a smaller number of heavier exertions within the same period of time, may, of course, amount to an increased tax upon the vital energy.” (“Evolution of Capitalism,” pp. .'337 et seq.)

We must not overlook, either, the striking number of horrible accidents arising from the tending of machines. Even if those gullible optimists who find in machinery a “ palliative,” an economiser of working class energy—if these people had a defensible case at all it is destroyed by this one factor, the mutilation, mortal and otherwise, traceable to machinery.

If we examine the tables of death rates in various occupations we find evidence of the risk run by the workers. Taking figures for 1900-1-2 (and an index number of 1,000), we find that in the list of occupations “ men of God ” stand well at 524, and farmers at 590. Tramway workers are represented in the holocaust by the number 1,013; copper, tin, etc. workers by 1,043; tool, saw, and file workers 1,315; cotton workers 1,114; brush makers 1216: whilst publicans (terrible example of the pious) are overtopped in the figures by general labourers at 2,235.

General labourers! The phrase calls up reflections of physical and mental misery deeper than of Grecian helot or “the rude forefathers of the hamlet.” 2,235! Pythagoras saw things strange and mystical in numbers; in the death rates and the accident rates of the class of labourers and miners Christian capitalists see things tangible— say a safe twenty per cent.; Socialists see the machine and the man, and curse the capitalism which serenely massacres the real pillars of society.

The machine (so we are told) “educates” the worker by giving him a complex machine to make and tend. If we grant the intricacy and skill involved in machine manufacture (an exercise of skill on the workers' part as great, as the much puffed “labour of superintendence”), it is more than counterbalanced by the tedious times of the machine-tenders, by the “sameness” of the proletarian's work. His home. Ins necessities, and his “luxuries,” all bear evidence of the mechanical, low-priced, and mean. Production in iron, brass, copper, wood, cotton, etc., is simply a story of the exercise of similar actions, the making of prosy repetition articles. To quote J. A. Hobson : “The constant employment on one sixty-fourth part of a shoe offers no encouragement to mental activity, but dulls by its monotony the brains of the employee to such an extent that the power to think and reason is almost lost.”

The workers, as Dickens said, are “those people who all go in and out at the same hours to do the same work; people to whom every day is the same as yesterday and to morrow, and every year the counterpart of the last and the next." The “rude forefathers of the hamlet" were oblivious of the motor car. the Linotype, and the music hall; hut in every village the craftsman in metals, wood, stone, or leather had by his daily work qualities of initiative and forethought cultivated, contrasting with the heavy band laid by machines on their bored minders.

The individual who has heard of the “miseries of grandfather’s days,” challenges us with the assertion that machinery has lowered the price of the necessaries of life. A quotation from Marx’s “Poverty of Philosophy” is apt here: “ The price of food [in civilisation] has almost continually risen, while the price of manufactured articles and luxuries has almost continually fallen. Take the agricultural industry itself: the most indispensable objects, such as wheat, meat etc. increase in price, while cotton, sugar, coffee, etc., fall continually in a surprising fashion. Even among food stuffs, properly so-called, luxuries, such as artichokes, asparagus, etc., are relatively cheaper to-day than the objects of prime necessity. In our epoch the superfluity is more easily produced than the necessaries of life. Finally, at different historical epochs, the reciprocal relations of price are not only different but opposed. All through the Middle Ages agricultural products were relatively cheaper than manufactured products : in modern times the relations are reversed.”

So Liberal-Nonconformists expect the worker to be ridiculously thankful at the cheapness of questionable boots, frail sovereign suits, and dollar watches, while the rent of his “ home,” the price of his beer, his food stuffs, his fuel, etc., was never so prohibitive as in the “palmy” present. On every point the machine defender is worsted. 'The worker is, indeed, badly housed, badly clothed, and badly fed.

The defenders of capitalism deny our assertion that machinery has made unemployment more acute. 'They admit that a new machine might cause a temporary displacement of labour, but contend that the decrease in price resulting from the use of machinery causes a new demand which absorbs the displaced labour. Things “adjust” themselves and all is for the best. But whilst the “adjusting” process is fructifying, the worker is being pushed further into the mire. The adjusting period may be only temporary, but human lives are likewise temporary. A knotting machine dispenses with five or six “twisters”; the later try to adjust themselves. Twisting is one of the numerous processes in cotton manufacture, and obviously the number of twisters is determined by the whole industry.

The production of cotton goods must increase six times if all the twisters are to find employment at their own occupation. Machinery thus makes the workers’ jobs more hazardous and temporary. It throws out six twisters and finds employment for one mechanic making the new machine. The mechanic in turn is displaced by a lad working a new machine which “economises labour” in the engineering shops. Commonplace statistics have shown the existence of unemployed in every “skilled’’ trade.

In conclusion. Socialists do not see a “devil” in machinery. They appreciate its value to a society wherein are neither peers nor paupers, moochers nor millionaires. Socialists object to the capitalism which uses machinery as a means of more rapid and efficient exploitation of the workers; object to the degradation resulting from the existence of a factor which, under Socialism, will add leisure and pleasure to life.

John A. Dawson

Markets, Monopoly and War (1985)

Book Review from the July 1985 issue of the Socialist Standard

A new edition of Rudolf Hilferding's Finance Capital: A Study of the Latest Phase of Capitalist Development has been published in a new translation and with a useful introduction and notes by Tom Bottomore (Routledge and Kegan Paul). It provides an opportunity to consider whether the theories advanced by Hilferding and others have been confirmed in the years since the work was first published in 1910.

Towards the end of the 19th century there was a growing tendency towards the formation of trusts and combines associated with what came to be known as imperialism. Among the other books on the subject there were J.A. Hobson's Imperialism (1902) and his earlier Evolution of Modern Capitalism, Lenin's Imperialism: the Highest Stage of Capitalism and L.B. Boudin's Socialism and War (1916). Later on J.M. Keynes had something to say about it in his General Theory (1936). Hobson held that monopolistic industries restrict output in the home market, in order to raise prices and profits, and therefore have to seek foreign outlets for investment and markets. For this purpose they get governments to colonise foreign territories (Evolution of Modern Capitalism, page 26). Lenin made use of Hobson for his own Imperialism, and gave high praise to much of his works. Keynes saw in Hobson many features of his own theories set out in the General Theory.

Hobson, unlike Lenin but like Keynes, offered a remedy:

If the whole gain of improved economies passed, either to the workers in wages or to large bodies of investors in dividends, the expansion of demand in the home market would be so great as to give full employment to the productive forces of concentrated capitalism, and there would be no self-accumulating masses of profit . . . demanding external employment.

Keynes (in Chapter 24) saw "the competitive struggle for markets" as a predominant factor in "the economic causes of war". But, said Keynes, if governments followed Keynesian policies to increase demand at home and thus maintain full employment, the competitive struggle for markets as a main cause of war, would disappear.

Lenin and Hilferding gave detailed accounts of the supposedly unstoppable growth of monopoly in industry and banking but carried it much further, crediting the banks with dominating industry and the cartels with fixing prices and dividing up world markets among themselves. Lenin wrote: "Cartels become one of the foundations of the whole economic life. Capitalism has been transformed into imperialism." Hilferding wrote: "An ever-increasing proportion of the capital used in industry is finance capital, capital at the disposition of the banks which is used by the industrialists" (page 225). Lenin quoted and endorsed this. Hilferding (page 368) said that it was only necessary to take over six large Berlin banks to take possession of "the most important spheres of large-scale industry". It is worth noticing that in the depression of the 1930s most of the big German banks collapsed, or almost did so, along with the industrial companies in which the banks' money was tied up. Among other forecasts made by Lenin was that because of the dominance of finance capital "there was a decrease in the importance of the Stock Exchange".

Some social-democrats, including Kautsky, thought that the end result would be "a single world monopoly . . . a universal trust", followed by socialism. Hilferding thought that this single world monopoly was "thinkable economically, although socially and politically such a state appears unrealisable, for the antagonism of interests . . . would necessarily bring about its collapse". But Hilferding (page 343) thought that world cartels would result in "longer ... periods of prosperity" and shorter depressions. The long depression of the 1930s and the long depression since 1979 belie this.

It was Boudin in his Socialism and War who put in its most crude form the theory on imperialism and war. He argued (like Hobson and others) that the turning point was the replacement of such industries as textiles by iron and steel. He wrote (page 64):

Modern imperialism ... is the expression of the economic fact that iron and steel have taken the place of textiles as the leading industry of capitalism, and imperialism means war. Textiles, therefore mean peace, iron and steel - war.

The argument was that exports of textiles and similar consumer goods are paid for at once but iron and steel exported to build railways, factories, ports and so on are long-term investments needing the protection provided by the home government turning importing countries into colonies. Boudin's theory to explain competition for markets (page 55) was:

The basis of all capitalist industrial development is the fact that the working class produces not only more than it consumes, but more than society as a whole consumes.

Therefore, said Boudin, developed countries cannot find markets inside the capitalist world but only on the fringes of capitalism, first in primitive agriculture at home and, when that too is developed, only in the countries not yet developed. These countries themselves develop and have to seek non-existent markets for their "surplus" products.

It is only necessary to look at what actually takes place to see that Boudin's theory is demonstrably false. The working class do not produce more than society itself consumes. Or rather, they alternately produce more than society currently consumes and then less than society currently consumes. At the onset of a depression stocks pile up of the goods some industries have overproduced for their markets but later on, as recovery begins, stocks run down again, as they did early in 1985. In 1983 British exports totalled 60,534m pounds sterling. According to Boudin this was all "surplus" to demand in the home market. Who then bought the 65,993m pounds sterling of imports that were sold in this country? In the same year, 77 per cent of British exports went to countries officially classified as "developed countries" which Boudin said was impossible. Hilferding, Lenin and Hobson all failed to allow for the sectional divisions of interest in the capitalist class. Hilferding treated the monopolist industries as representing a united capitalist class.

Certainly the export industries have an interest in getting the government to promote exports. But most capitalists have no such interest. British exports represent under a third of total production; for America and Russia about 10 per cent of total production. At their conference last year the Confederation of British Industries defeated an executive resolution calling on the government to lower the exchange rate of the pound in order to promote exports. The industries making profit by selling imports in the home market, and the industries buying cheap imports rather than pay more for home products, want the exchange rate to be higher, not lower.

At a time when the Thatcher government was declaring that they wanted the pound exchange rate not to fall but to rise, and asking Reagan to help bring it about, the Financial Times published an article (14 January 1985) with the title "Industry Delighted At Fall Of Pound". It was true only of export industries not having to import raw materials, but in the article there were examples of industries having to import materials which wanted the pound exchange rate to rise and not to fall. The British Steel Corporation told the Financial Times that "every one cent decline in the value of sterling costs us 4 million pounds sterling".

The failure to recognise sectional capitalist interests applies particularly to monopoly, which raises selling prices and consequently profits for the monopolies and is viewed very differently by the rest of the capitalists, who object to being held to ransom. In the 19th century British government policy towards monopoly was to protect the interests of the rest of the capitalist class by nationalisation, as with telegraphs and telephones. Frederick Engels put the same view in his Socialism, Utopian and Scientific: "...no nation will put up with production conducted by trusts, with so barefaced an exploitation of the country by a small band of dividend-mongers". The same idea was behind the Tory railway nationalisation Act of 1844. It gave the government power to take over the railways and was used as a threat of what would happen if the railway companies continued to use their monopoly to the detriment of the rest of the capitalist class.

But in America the method used was to control monopoly by the Anti-Trust Laws, which have resulted in heavy fines and sometimes imprisonment. American Telephone and Telegraph, controllers of the near-monopoly Bell telephone system and described as the largest and richest corporation in the world, has recently fallen foul of the law and has been broken up into separate organisations, all open to competition. In Britain, the Tory government has gone over to the American system. Along with partial de-nationalisation the Telecommunication services have lost their monopoly and been thrown open to competition. The same applies to bus services. British governments long ago halted further amalgamation of the big commercial banks who now face competition from the development of ordinary banking services by the building societies, the Trustee Savings Bank and others. How far this process will go remains to be seen, but the belief of Hilferding and Lenin that competition was dead, has been disproved.

It is equally clear that Boudin and Keynes were wrong in their belief that the competitive struggle for markets results from an inbuilt deficiency of demand in the home market. The profit motive behind the search for overseas markets by the export capitalists is no different from the profit motive behind the home producers for the home market, and the import capitalists.

What then are the causes of international conflicts of interest and war? Some, but not many, wars are fought over markets. For example the opium wars, when British traders were able to get the government to go to war to compel China to allow the import of opium. In the modern world, markets take second place to strategic issues. The conflict between America and European countries on the one side and Russia on the other illustrates the point. It is not Russia but Japan, America's ally which has flooded American and European markets with their cheaper products. The point was put in proper perspective by Professor Edwin Cannan in 1915:

"Commercial interests seem to me to appear in international quarrels simply as a cover for strategic interests. Where there are not supposed to be divergent strategic interests, no amount of divergent or supposedly divergent commercial interests produces either war or preparations for war" (An Economist's Protest, page 26).

This exactly fits the relationship between America and Japan because the latter is held to be strategically so important to America's control of the Pacific against Russia. The most frequent cause of conflict and war is the effort of national sections of capitalism to obtain control of needed overseas sources of food and other materials and to protect transport routes. Petrol products have bulked large in this century. It has not been competition by oil producing countries to sell their oil that has threatened war but the importing countries' need to have dependable supplies. Two years ago, America threatened military action if the Middle East oil producing countries organised an embargo on exports to America and Europe.

Discussing the question Engels, in a letter dated 27 October 1890, pointed out that it was the search for gold which led the Portuguese to Africa, and it was not exports to India but imports from India which led to the conquest of India by the Portuguese, Dutch and English between 1500 and 1800: "Nobody dreamed of exporting anything there". Exports came later.

Lenin made a valid point in his Imperialism about some annexationist wars. He wrote that sometimes the powers try to annexe regions "not so much for their own direct advantage as to weaken an adversary and undermine its hegemony". Lenin and Hilferding both saw the growth of monopoly and its resulting wars as a prelude to socialism, and insisted that socialism was the only answer. But Hilferding found himself acting as Finance Minister in a German coalition government, trying vainly to solve the problems of German capitalism. And Lenin's "socialism" has resulted in Russia becoming a capitalist super-power.

Lenin saw "the export of capital" as the hallmark of capitalism's highest stage. It is interesting to note the role now played by Russia. The Statesman's Year Book, 1962 had this to say:

After the second world war the USSR has become one of the biggest creditor countries in the world. Between 1955 and January 1961 economic aid in the form of 2 per cent and 2? per cent loans, has been advanced for over 520 industrial and agricultural enterprises in socialist countries.

This foreign loan policy has continued since 1961.

Edgar Hardcastle

More of Edgar Hardcastle's article from the Socialist Standard can be accessed at his page at the Marxist Internet Archive.