Cooking the Books: Economic leverage (2026)

The Cooking The Books column from the July 2026 issue of the Socialist Standard

‘Workers face worst squeeze on real pay since 2022’ was the headline of an article in the Times (20 May) by its Economics Editor Mehreen Khan. In the first three months of this year, average weekly earnings increased by 3.4 percent, which was more or less the same as the rise in the Consumer Prices Index. ‘However’, Khan writes,

‘while real incomes are on course to flatline this year, the jump in global oil prices is expected to push annual inflation close to 4 per cent in the coming months’.

If average earnings go up by 3.4 percent and consumer prices go up by 4 percent, that’s a reduction in real pay for workers. So why don’t they simply go on strike and push up wages to keep up?

The answer is that workers don’t have the power to put up the price of what they have for sale — their labour power — just because they want to, even to cover a rise in the cost of what they need to produce what they are selling. They, like all other sellers, can only charge ‘what the market will bear’. And, as Khan and the economists she quotes note, the current state of the labour market will not allow an increase:

‘Rising prices, combined with a weakening job market — where unemployment has risen to 5 per cent — means workers are losing their bargaining power to demand pay rises, economists said.’

One of the economists, Josie Anderson of the financial services group Namura, used the term ‘soft labour market’. This doesn’t mean what you might expect — surely, the current labour market is a ‘hard’ one as far as workers are concerned? — until you realise she was writing from the employers’ point of view as buyers of labour power. An AI definition of the term (cobbled together from other definitions) makes this clear:

‘A soft labor market (also called a “cooling” or “loose” labour market) is an economic environment where the supply of available workers outpaces the demand for labour. In this climate, hiring slows down, job seekers face stiffer competition, and employers regain negotiating leverage.’

Whether or by how much real pay goes up or down is a question of the respective bargaining strength of employers and workers, which in turn depends on the state of the labour market, but that is not something we are usually told by the media. Normally the story is of greedy workers causing inflation by forcing employers to agree to excessive wage demands.

Sometimes workers are in a favourable bargaining position and can maintain or push up real pay: when business is booming, finding a job is easy, and employers are making good profits; this ‘hard’ labour market for employers gives workers some ‘negotiating leverage’. That is the time to strike or threaten to strike. But the reverse of this is a ‘soft’ labour market for employers; it is they who are then in a stronger bargaining position, as at present and, according to one of the economists, for the fourth time ‘in less than two decades’.

We are talking here just about changes in bargaining leverage over the shortish-time price of labour power. Ultimately, over wages, the capitalist class have the upper hand as they monopolise productive resources. This gives them leverage to force workers to sell their labour-power for a wage in the first place. There is no bargaining about this; it’s just a fact of capitalist life that is imposed on workers. The way out for them is political not economic: to take political action to make the means of life commonly owned and democratically controlled by the whole community. Then there will be no labour market and no wages system.

Why the Unemployed are Necessary under Capitalism. (1908)

From the December 1908 issue of the Socialist Standard

Beyond doubt the problem of unemployment is beginning to assume a new aspect. Hitherto a regrettable, but quite incidental, visitation of Providence, a working-class concern (as bad trade has been to do with the master class), a temporary inconvenience, our rulers have said, not entirely beyond the ameliorative touch of Private Charity, the problem is now developing a new visage.

The Incubus of the Out-o’-Work.

There is an ugly gleam in its eye, an all-devouring menace in its bestial mouth. No longer can the capitalists pretend that Private Charity is able to deal with the situation—it has been like a bee lending its honey sac to the support of a hungry elephant. It is so short a while since the dread shape was rampant over the land, and now it rises again, with added stature, with renewed rage and redoubled vigour. But the disquieting thing is that during the interim the shape has never for a moment been banished. Our lords and gentlemen and honorable boards, our masters and pastors and those set in authority over us, our organisers of production and captains of industry, all took it for a ghost, and tried to “lay” the ghost each in his own way. And alike for those who took it to the Lord in prayer, and those who passed measures in the legislature, and those who offered propitiation out of the lean purse of Private Charity, and those who accepted the Miltonian dictum that “they also serve who only stand and wait,” the shape unobligingly refused to be “laid.” The thing has not righted itself, even temporarily.

A strengthening suspicion is spreading over the minds of the master class that when the thing does right itself, it will do so in a way distinctly unpleasant to them. It dawns upon them that this thing which, they with complaisance regarded as a cross the workers had to bear, threatens more and worse against the rulers than the ruled. The idea takes shape that this nightmare is the product of their own operations, the inevitable and ominous companion of capitalist production, and they go in mortal fear that, sooner or later, it must overwhelm them.

The Policy of Sop Throwing.

Hence there are signs that every cheap expedient is to be used in the endeavour to stave off the flood of destruction which threatens to burst from this heaped up and increasing mass of humanity so completely cut off from the means of life. And are these efforts to succeed ? Let us enquire into the nature of the problem.

It is not the mere fact that so many men are idle that constitutes the serious feature of the problem. It may be no unmixed blessing to have this army of workless workers kicking their heels together, especially when the devil begins to apply his solution by finding work for their idle hands to do, but it is nowhere suggested that any other consideration can compare with the fact that the unemployed lack the necessaries of life—they starve in their great numbers, and those greater numbers dependent upon them starve in company. The real problem is, therefore, not to provide work for the unemployed, but to furnish them with the means of subsistence. It is a misnomer to call it an unemployed problem it is a starvation problem.

The solution of the starvation problem has been left to Private Charity: she has failed. They say the goddess has a slender purse, and we know that is true. Let us then suppose Private Charity’s purse as broad and deep and illimitable as her heart is said to be, that out of her bottomless resources and melting pity she could and did give to repletion to all directly or indirectly suffering from the effects of unemployment, what then would happen ?

The Awful Indolence of Man.

Alas for her peace of mind, our masters never tire of telling us what would happen. “Human nature,” they say, “would assert itself. It is not human nature to engage in uncongenial toil save under pressure. Remove the pressure of want from the unemployed and at once you have an army of ‘won’t works.'” Private Charity consents to the judgment, as must you and I.

There is no doubt about it, man does not sell his labour-power, and with it necessarily his liberty, for fun. To be unemployed is no terrible hardship in the absence of the poverty which accompanies working-class unemployment. Relieve us of the coercive force of the empty stomach, the shameless importunity of the landlord, and so on, and, frankly, we would not worry about work—our human nature is not so different from that of our betters that we need blush to confess that. And then what would happen ?

What would happen, my friends, in this impossible case, is just this. Those in employment,, finding themselves relieved of the competition of the workless (we will leave out of consideration the fact that their “human nature” would impel them to become workless, too, upon such terms), would begin to cast about them for some means of improving their condition. As it is true, as our masters tell us, that the workers would not sell themselves to toil unless they were forced to, it follows that they would oppose a more effective resistance to the weakened coercion. They would demand a higher price for their labour-power, either through increased wages or a shorter working day, or both.

Nothing Left for the Boss – What O !

We are taking here the extreme case, in which the labour market is entirely and effectually relieved of the pressure of the unemployed—whether by provision of work or of direct sustenance does not matter one iota. Theoretically, the worker, being without a competitor, would have things all his own way. Wages, being a price, must rise by leaps and bounds, as all prices do in the absence of competitors. And as, mind you, wages are that portion of the total value created which is enjoyed by those who create it, it follows that a rise in wages results (other things remaining constant) in a decrease of the portion of value left to those who do not create it.

Now mark the effect. Capitalist demand for labour-power is excited only by the desire for that portion of the value created which remains after that labour-power is paid for, and will therefore be in proportion to the relative amount of that surplus-value. Just as the removal of the unemployed from the labour market has torn from the employing class the power of resisting the demands of the working class, so now the diminished profits react against the worker by lessening the demand for labour-power which the desire for profit alone creates. Those concerns which have been run at the lowest profit, immediately cease to show any at all, and are shut down, and Private Charity has other hordes to comfort at her eleemosynary bosom. Solomon gurgled of “breasts like towers,” but she needs breasts like oceans for the job she has taken on, must wear thin and thinner with the calls upon her system, and after all her sacrifice will prove unavailing, for wages, rising to the point of extinguishing all profit, has extinguished with it the capitalists’ desire to engage their factories

and machinery in the process of wealth production.

No Profit, No Production.

Here is a deadlock. The solution of the unemployed problem by sustaining the workless has resulted in the raising of wages, the absorption of profit, and, as a necessary corollary, the cessation of production. From which it appears that idleness has its dignity, no less than labour, since the unemployed are necessary to capitalist production, and that it is true indeed that “they also serve who only stand and wait.”

But capitalist sophism tells us that other things do not remain constant—which, of course, is true enough. We are told that a rise in wages is followed by a rise in prices, but this is presuming too much upon our ignorance. The workers create all value, whether it take the shape of golden sovereigns, loaves of bread, stained glass angels, or what not. If then the price of loaves went up alone the sovereign would buy fewer than before; but if the price of gold rose proportionately, the relative positions of the two remain the same. Just all prices are to go up, since all commodities are the result of wage labour and all wages are to rise. The result is that none of their relative positions have changed. The sovereign still buys as many loaves before, as many Manifestoes or SOCIALIST STANDARDS. There has then been no rise in prices, though, since our ingenuous masters always except one commodity (labour-power) from the added price-stature, they manage to indicate a fall in wages—which is all they want to do. But, with no unemployed “standing and waiting,” the working class would hold the whip hand. And all this is apart from the fact that prices of commodities do not bear relation to the cost of the labour-power consumed in their production, but to the amount of necessary labour embodied in them.

Machinery creates its own Unemployed.

Again other things do not remain constant. We have been considering an extreme case, where production has ceased because profit has ceased, and all because there were no unemployed to keep down wages. It is clear then, that if production is to continue, is must either do so under conditions in which its operation is not dependent upon profits, or the unemployed must be again brought into being to force down wages and allow profit to reappear.

The system makes beautiful provision for this by the law of the development of machinery. In practically every trade there exists machinery and methods in partial use far in advance of that generally employed—indeed, all through the industrial world there are degrees of perfection or imperfection in the means of production, tailing away into antiquity so distant as can just be run at sufficient profit to save them from extinction. In each degree of development there is a fringe where it is a question if better machinery could not be more profitably adopted. Any raising of wages at once decides the question. At all times machinery is the competitor of labour-power. To increase the price of the latter is merely to hasten its displacement by the former. In the printing world the Linotype composing machine is an accomplished fact. It is not that the machine would have to be invented—it is there, doing the work of several men under the hands of one. The only question is the diameter of the circle of its profitable application, and this, of course, is a matter of competition with the hand compositor.

An Automatic Adjustment (not patented).

If the wages of the latter go up, there is a corresponding advantage on the side of the machine, an enlargement in the circle of its employment, and an addition to the unemployed army to beat down wages again. It may be said that the machine operator’s wages rise also, but that is only one man’s wages against several displaced by the machine. It may also be objected that the cost of the machine is raised since higher wages must be paid for its construction, but that lands us again in the impossible position of witnessing an all-round rise in prices, and runs counter to the economic verity that prices (averaged by rises and falls cancelling one another) express, not the amount of wages consumed in producing the commodities, but the necessary labour embodied in them.

The fact is that every advance in wages reacts upon machinery and methods, pronouncing the doom of those requiring most labour-power to operate them, throwing men out of work, and so creating that army of unemployed which is necessary to the continuance of production so long as production is carried on for profit.

The position may be summed up as follows. As under present conditions all commodities are produced for profit, production must cease with the cessation of profit. As profit and wages between them constitute, and have their only source in, the value created by the worker, profit can only appear while wages are prevented from consuming the whole product of labour. As wages, the price of labour-power, are regulated by the relation of supply and demand, a surplus of labour-power (the unemployed) is necessary to prevent wages swallowing up all profit.

The Logic of the Revolutionary Proposal.

Therefore the unemployed army is a vital necessity to capitalist production, and there can be no solution under capitalism.

As wages are regulated by the relation of supply to demand of that labour-power which it is the price of, any diminution of the surplus (unemployed) labour-power is attended by a rise in wages. As machinery is the competitor of labour-power, any rise in the price of labour-power induces its displacement by machinery, which thus creates in perpetuity the out-of-work army. Therefore there can be no partial solution to the unemployed problem under capitalism.

As profit is the only incentive to capitalist production, and an unemployed army is an inevitable necessity to the production of profit, it is clear that the solution of the unemployed problem must be sought in a new productive objective—production must be independent of profit.

As the consumer demands the production of commodities because they are use-values, and demands them as long as they have use-value, it is clear that utility would be a more constant incentive to produce than profit, since things have always utility while people need them, and it is just when people need them most, because they are starving, but have no money to pay for them because they are unemployed, that there is no profit in their production.

As production for profit implies the power to wrest from the workers part of their product by keeping some of them (the unemployed) from production, it presupposes also private ownership by the few of the machinery of production.

And as production for use means production while any one has need, it implies free access to the means of production—in other words, common ownership of the means and instruments for producing and distributing wealth, by and in the interest of the whole community.

The establishment of this changed property condition is the revolutionary proposition, the object of all Socialists. It is revolutionary because it changes the whole structure of society from top to bottom. In particular it abolishes the unemployed by giving free access to the means of production.

Socialism is the only cure for unemployment, therefore study Socialism.

A. E. Jacomb

Cooking the Books: Capitalism: whose bonanza? (2024)

The Cooking the Books column from the January 2024 issue of the Socialist Standard

‘Few ideas are more unshakable than the notion that the rich keep getting richer while ordinary folks fall ever further behind. The belief that capitalism is rigged to benefit the wealthy and punish the workers has shaped how millions view the world, whom they vote for and whom they shake their fists at.’ 

So began the editorial in the Economist, 30 November.

The editorial went on to argue against this view by saying that the facts showed that income inequality, in the sense of the ‘wage gap’ between the lowest paid and the highest paid workers has not increased and that it is likely to decrease in coming years, describing this as a ‘blue-collar bonanza’. But this is a sleight of hand as it leaves out the incomes of the few who enjoy a privileged, non-work income from owning means of production.

Of course the owners keep getting richer. That is what the capitalist system is all about. It’s about money being invested in production with a view to making a profit. Competitive pressures ensure that most profit is re-invested in further production for profit. So capital accumulates and those who possess what it is invested in come to own more; they get richer. So, yes, capitalism is rigged — structurally determined — to benefit the wealthy as a class, however the proceeds might be divided amongst them.

Does capitalism ‘punish the workers’? Yes, though that’s a novel way of putting it. The source of profit is what wage-workers produce over and above what it costs them to produce and maintain their working skills. A part of what they produce is kept by their employer and subsequently divided into various privileged non-work incomes. In other words, they are economically exploited. Which could be described as a punishment. In any event, it’s a built-in part of the capitalist economic system.

But does the gap between the lower and higher paid workers have to increase? There is nothing built into capitalism that means it should. Wage differentials exist because the different kinds of working skills that workers sell command a different price, due both to their different costs of production and maintenance and to the varying demand for them. Sometimes the gap increases. Sometimes it decreases. Sometimes it stays the same. It depends on the job structure and labour market conditions in any period.

The editorial itself gives a good example of how changing labour market conditions can affect wage differentials:

‘At the end of the 20th century the information revolution vastly increased the demand for college graduates with brains and computing skills. From Wall Street to Walmart these stars were put to work transforming how firms did business, making use of new tools including email and spreadsheets. By the mid-2010s, however, the revolution had matured and the college wage premium began to shrink. In 2015 the average rich-world worker with a bachelor’s degree or more was paid two-thirds more than the average high-school leaver; four years later, the gap had narrowed to a half.’

At the same time there is a labour shortage for certain manual jobs. But will this really amount to a bonanza for blue-collar workers or just the prospect of a modest increase in wages due to their being in a better bargaining position? And what about the other section of the wage-working class that is losing out? It could just amount to no more than a redistribution within the broad working class. In any event, it doesn’t put an end to workers’ economic exploitation for profit. Meanwhile capitalism remains a bonanza for those who own the means of living.

"Electionitis." (1905)

From the November 1905 issue of the Socialist Standard

Of course, the critics have been having at me anent my arguments in the last issue. It is a way that critics have, and I believe other notabilities have been victims of this species of organic life which is so hard to classify. The particular sample of the unspeakable order whom I have in my mind’s eye at the moment appears to base his claim to lay down the law economic on the fact that he has read W. T. Stead’s If Christ came to Chicago. One point he maintains is that the return to labour is dominated by the cost of subsistence, and, too modest to claim that his pronouncement alone places the matter beyond dispute, he says that Karl Marx agrees with him. Well, to save trouble, I will agree with him also, after which there is nothing more to be said upon the matter. But having thus simply established the great truth that the return to labour is dominated by the cost of subsistence, we have still to deal with the inquisitive man’s query, “Why?” And from what I know of the inquisitive man he is not likely lo be satisfied with the woman’s answer (if I may say it without raising the sex question) “Because it is.”

Now I do not wish to be understood to imply that the variations in the relative proportions of supply and demand in the labour market are to be explained by the accelerated or retarded growth of the working-class population. In stating that a greater material return to labour must result in an increased production of labour-power I have made the proviso that other conditions remain constant. Such a consummation under the given conditions would, of course, be only the insistence of the natural law of life. But capitalism has laws of its own ; and my point is that it is these laws of capitalism that determine that the return to labour shall fluctuate about a certain point, and which set limitations upon, or—I dare narrow it down to this—render utterly ineffective, any and all interference of man save such interference take the shape of the abolition of the form of production which is supported by these laws.

To insist that, under certain conditions, an increased return to labour will result in an increased production of labour-power is not by any means to say that such result will take place in fact. If other things did remain unaltered, that is to say, if the increased return to labour which the palliatives aim at did not set in motion certain antagonistic and irresistible forces which would presently compensate capital for its previous disbursement, then such increased return to labour must have the result I have indicated. I would venture to suggest, seemingly against the opinion of Marx, and therefore with humility, that capital does to a certain extent, and by a deeper and steadier movement than the more apparent ones to be mentioned later, as the tide is deeper and steadier than the waves, regulate the supply of labour-power to its average requirements (perhaps it would be more correct to attribute this activity to forces outside capital) by controlling the growth of the working-class population. It seems to me that only by this movement can the cost of its production dominate the value ol labour-power, while its price is more directly under the influence of other movements. Whether this is correct or not matters very little at this juncture. Karl Marx shows very clearly that the labour market appears relatively full or empty, not on account of any absolute increase or decrease of the number of the wage-workers, but because the contraction or expansion of capital, calling for less or more labour-power in its operations, alters the proportion of the employed to the unemployed among the workers. This, then, is the outline of the process by which capital controls the supply of labour :—

Capital, growing by the absorption of profit, increases faster than the working-class population, restricted as the latter is by the degree of exploitation, and presently outstrips the supply of labour-power. The result of this is a rise in wages ; and since this can only take place at the expense of the rate of surplus-value, the growth of capital is checked, firstly by the reduction of the proportion of profit which it could possibly add to itself, and secondly (owing to the decreased rate of profit offering smaller incentive to productive activity) by the reduction of the proportion of realised profit which is converted into new capital. So the growth of capital itself raises up obstacles to its continued expansion, and it next proceeds to remove those obstacles. The relative proportion of the unemployed to employed having fallen below the point of greatest advantage to capital, the latter sets about a readjustment of the labour-market. This is accomplished by the simple expedient of increasing the productivity of labour. Machinery already in partial use becomes profitable to a still larger circle of employers ; invention is quickened and new machinery, throwing many out of employment and consequently into the reserve army of labour on the one hand, on the other hand places at the disposal of capital another and lower strata of labour-power. And the supply of surplus labour-power having been so adjusted to the needs of capital, wages again decrease, larger profits again stimulate industrial activity, capital expands by leaps and bounds and rushes on fill it raises again in its path the obstacle to extension—a relatively small unemployed or industrial reserve army. And so the round is repeated.

All this is on the authority of Karl Marx. Whether it, is endorsed by the author of If Christ came to Chicago I am unable to say : perhaps my critic can. And that reminds me that the latter has led me rather away from my intended line of argument, which was to show that, given the competitive labour market—the very vital spot of capitalism,—the return to labour is prescribed by laws which, while permitting temporary interferences, use the effects of these interferences as a means of restoring the normal degree of exploitation, and even of exacting compensation for the earlier advantage such interference may have given the workers, and that, therefore, all such artificial interferences with the return to labour (in which category we must place nearly all the so-called palliatives) must fail to effect their purpose of bettering the material conditions of the working-class. That they might benefit a section I will not deny, but I, for one, if I desired the advancement of any section, see no reason why I should not rest content with the magnificence of the capitalist section.

Let any thinking man study the working of the marvellous laws by which capital, sensitive to every fluctuation in the flow of its life’s blood, profit, controls the material conditions of those whom it only suffers to exist for the purpose of producing that profit, and then, having learned how faithfully capital is served by these laws, he may judge how little they may be defied or circumvented. Let him observe how a rise in wages is met by the extension of the circle of the profitable employment of machinery, how the shorter day is counterbalanced by speeding-up and increased output, how the depleted labour market is rendered fat and redundant by the contraction of capital and the greater use of labour-saving machinery, how every effort of man to find some little amelioration is baffled and beaten by those vigilant, sheep-dogs, the laws of capital; and observing all these movements, tireless and irresistible as the tides, he will begin at last to understand why we so steadily refuse to direct the workers’ strength to be broken against these implacable laws.

The palliatives, so far from being desirable to the workers, are very quicksands for the entanglement of working-class feet. They are the means of seduction in the cunning hands of capital, and possess a power for capitalist defence that only the stewards of capital seem to realise. These gentlemen know that they properly belong to capital’s armoury. To how many of us is the tale familiar, of the Russian noble who was chased by wolves. He was up to the palliative dodge. One article after another he flung to the wolves for them to wrangle and delay over, and they missed their prey after all. This is the chief use of reforms. Cleverly handled there is a century of respite for capitalism in the palliative programme of the reform parties—and who can doubt that they will be cleverly handled ?

Those who are urging the workers on after the palliative chimera are assuming a responsibility of profound gravity, notwithstanding that they take it up lightly as a child draws breath. That they assume this responsibility in the name of Socialism compels our strenuous opposition : we dare not be silent because we dare not be implicated. We do not doubt that a certain early progress will attend the efforts of the reformers : that is always the portion of those who take the line of least resistance. But when the lever meets little resistance it is moving little weight; and the weight we are trying to get our lever under is a stupendous one.

The effect of “electionitis” upon those who yield themselves guarded by anything less than the most stringent and exclusive of Socialist restrictions, up to its seduction, is utter political prostitution. Examples of the truth of this statement might be given ad nauseam, but one case which has recently come under my notice will suffice. At this November election in West Ham the Stratford Branch S.D.F. contested the High Street Ward. A really sterling Election Address was rounded off by the usual list of palliatives which the candidate pledged himself to work for in order to “ease” the condition of the workers. And among others appears this :—”School Board and Poor Rate to be a national charge.” I do not know whether I should be sooner forgiven if I credited the participants with unshameable dishonesty or with incredible ignorance, but, fortunately, the choice is not mine. The clear drafting of the Address testifies to their knowledge of the position, and so doing convicts them of dishonesty. Further, the members of this branch have recently lifted themselves on to the pedestal of notoriety by the vehemence with which they have publicly asserted that rates are no concern of the workers, and that they did not care if they went up “to twenty shillings in the pound.” If rates are the concern of the workers it is dishonest to say they are not; if they are no concern of the workers it is treachery for working-class representatives to pledge themselves in connection with them. It is interesting to recall that “electionitis” three years ago led the Committee fighting this ward to dodge a resolution which the present scribe got passed, to the effect “that Terrett be not allowed on MacAllen’s platform,” by the simple expedient of putting MacAllen on Terrett’s platform ! Which makes one sigh for the honour even of thieves.

A. E. Jacomb

Voice From The Back: The advance of poverty (2010)

The Voice From The Back column from the June 2010 issue of the Socialist Standard

The advance of poverty

Every day we can read about the expansion of capitalism and how new industrial and commercial giants are arising to challenge the supremacy of the USA. One of the leading candidates in this struggle is India. We are constantly hearing about the modernisation of that country and the supposed benefits of the expansion of capital. We don’t hear so much about the plight of the working class there though. The following news item illustrates that the supposed benefits of capitalist modernisation are not so wonderful after all. “India has 100 million more people living in poverty, official figures show – 37.2 per cent of the population compared with 27.5 per cent in 2004 – with 410 million people below the UN poverty line of $1.25 a day” (Times, 19 March). Surviving on a pound a day while the owning class of that country now boast of the richest men in the world. “Indian names now figure prominently on the league tables of the wealthiest people on the planet. The country now boasts 47 billionaires, up from 12 in 2005 and just nine at the turn of the millennium, compared with 10 in France and 35 in Britain” (Observer, 9 May). That’s capitalism for you – surviving on £1 a day contrasted with the lives of billionaires.

The whip hand

“British Gas has received more than 65,000 applications for 600 gas fitter apprenticeships. The scheme pays £5,000 a year, plus expenses, to train staff to repair boilers and radiators. The 100-to-1 ratio of applicants to openings, twice the usual ratio, has been caused by surging youth unemployment, boosted by graduates and mid-career professionals searching for jobs. Most applicants are aged between 20 and 26, although British Gas said some were in their fifties” (Sunday Times, 18 April). Not only do we have workers madly competing for the right to be exploited but we have workers in employment working overtime for no extra pay. “One person in four is working longer than ever but few are paid extra for putting in overtime. A survey of 2,000 workers, carried out for Santander, found that the average employee in the UK is working a 41-hour week for an annual wage of £27,150. One in seven of those polled is doing at least 11 hours of overtime every week, but only two in five are paid extra” (Times, 4 May).

Fifty years of gradualism

One of the oppositions to world socialism is that rather than have a complete transformation of society we could have piece by piece gradual change. Well let us look at how that has worked out in relation to the environment. “Sir David Attenborough has warned that Britain’s wildlife is being destroyed thanks to man’s impact on the environment. The naturalist made his comments in the foreword to a new book, Silent Summer, in which 40 prominent British ecologists explain how humankind is wiping out many species. It comes fifty years after the publication of Silent Spring, Rachel Carson’s acclaimed book on pollution of wildlife that helped the growth of the environmental movement worldwide and led to a ban of some pesticides in Britain” (Sunday Telegraph, 25 April). So fifty years after the alarm was sounded the position is even worse. That is gradualism for you. The drive for bigger and bigger profits means that the environment is of little importance.

A papal view of society

There are many ways to look at society. What are the most important aspects of present day society? Socialists might say the fact that a third of the world is starving, or that we live in a society that could be annihilated in a nuclear holocaust or even that in the drive for profits we risk the delicate balance of the global environment. None of these considerations entered into the reasoning of the Pope when he recently visited Portugal. “The Pope yesterday condemned gay marriage and abortion as ‘among the most insidious and dangerous challenges’ to society, as Portugal prepared to legalise same-sex partnerships next week. Benedict also criticised Catholics ‘ashamed’ of their faith and too willing to ‘lend a hand to secularism’. Ninety per cent of Portuguese define themselves as Catholic, but Portugal’s society is increasingly secular, with far fewer than a third saying they attend Mass regularly” (Times, 14 May). Starvation, worldwide slaughter or global warming? Not as important as abortion or same-sex relationships according to His Holiness – no wonder the pews are emptying.

Class struggles in France (2006)

From the May 2006 issue of the Socialist Standard

Doubtless many readers of the Socialist Standard will already know that the strikes and demonstrations in France last month had to do with the new work contracts which the de Villepin government introduced into the legislative process over three months ago. Some of this legislation is already on the statute books: the so-called Contrat Nouvelle Embauche (New Hiring Contract), for example, already covers more than 300,000 hirings in small enterprises. It was only over the infamous Contrat Première Embauche (First Hiring Contract) that President Chirac has back-pedalled  in the face of massive demonstrations. This ultra-liberal legislation was aimed at establishing more flexibility into what is often considered to be a highly protective and rigid system of employment relations in France. This legislation was justified in terms of the high levels of unemployment experienced by young people, the recent riots in France being presented as a wake-up call heard only by right-wing politicians but ignored by the more consensual politicians on the left. French workers were being asked to believe that the scrapping of legal protection against arbitrary hiring and firing was in their own interest.

Both the CNE and the CPE established the principle of abrupt firings with little or no legal protection for workers during a two-year trial period. The CNE affects workers in small enterprises and can be applied to workers of any age whilst the CPE was aimed at young workers up to 26 years of age. Once the two-year period is up (if it ever is), the happy workers will be offered permanent contracts, so everything will turn out well, in theory. Other legal dispositions packaged under the misleading term ‘law of equal opportunities’ include the possibility of hiring apprentices at 14 years of age and the possibility of inducing 15-year-olds to work at night. This partial return to nineteenth-century practices, we are told, would loosen up hiring practices and significantly reduce the high levels of unemployment recorded in the statistics produced by governmental agencies. The cost, of course, will be a significant increase in the insecurity experienced by workers who risk being laid off at any moment. This means that they will soon be unable to find decent accommodation, accumulate pension rights or simply plan for the future in such a way as to constitute normal family life. The contrast with the existing legislation centred on the permanent contract with built-in pension provision and a range of social benefits could not be sharper.

Big Lie

The difficulty of getting workers to swallow the big lie that job insecurity is a good thing being obvious, the government resorted to an ideological broadside aimed at setting one category of worker against another. The students who sparked off the movement against the CPE have been presented as privileged middle-class youth relatively unconcerned with the dire situation faced by immigrants in the run-down sink estates of the suburbs. The de Villepin government asked us to believe that these contracts were designed specifically to help a population of workers which has been consigned to suburban dumping grounds for more than three decades. (The fact that de Villepin waited for more than three weeks of demonstrations before he discovered this ideological fig-leaf shows how clumsy the public relations job has been.) Another strategy was to present French workers as dyed-in-the-wool conservatives defending a status quo made irrelevant by globalisation, the highly indebted nature of the French state and the need to remain in the vanguard of the technological revolution.

Inevitably, the ‘phenomenal success’ of Tony Blair’s ‘Third Way’ in reducing the level of unemployment to a mere 5 percent was wheeled out as a counter-example to French timidity, notwithstanding the fact that the definition of unemployment in Britain has been changed over 20 times since the 1970s in order to disguise the real situation. Workers in Britain are well aware that the unemployment and insecurity which they see all around them does not find its way into the official statistics. The deregulation of the labour market in Great Britain over the last two decades has resulted in a doubling in recorded levels of official poverty and a new category of working poor has emerged to replace the indemnified unemployed. The recent mass strike of over 1.5 million public sector workers clearly shows that workers in Britain are by no means living in a neo-liberal cornucopia.

This said, it’s true that many French workers have enjoyed a level of protection denied to many new entrants into the labour market, young workers and immigrants. The permanent work contract provides access to a range of social benefits and protections which are envied by those workers who hop from one short-term contract to another. The government obviously hoped that this would constitute a source of resentment and jealousy which could be exploited. It’s true that workers on permanent contracts are difficult to fire, given that breaking a contract in these cases is very expensive, compensation being proportional to the number of years worked. But this tactic has backfired: even short-term contracts are better than the almost total absence of legal guarantees contained in the CPE and CNE. Besides, over half a million ‘baby boom’ workers are now leaving the labour force every year heading for retirement, so the level of youth unemployment is bound to fall. The question is whether or not these relatively secure jobs will remain on offer to the new entrants.

The hard fact is that it’s quite clear that in the long run greater job insecurity is on the cards for everyone. Long term permanent jobs – jobs for life – are getting scarcer and even the public sector has been placed on a slimfast diet. The bosses want workers who can be hired and fired in reaction to sudden and unexpected changes in demand in markets where every sale counts. Industrial jobs have been disappearing fast to be replaced by service sector jobs which are notoriously badly-paid and insecure. These trends do not respect political frontiers. The left-wing government under Lionel Jospin imposed a shorter working week in exchange for greater flexibility in working patterns, production workers being placed on call for work during the weekends or in the evenings to meet sudden fluctuations in demand with disastrous consequences for family life. Real wage levels are stagnant or falling. Pension rights have been reduced. A capitalism which attempted to adjust fluctuations in world demand by modifying monetary exchange rates in accordance with the rules laid down by the International Monetary Fund has been replaced by a highly volatile monetary system in which adjustments are made by hiring and firing production workers. The new generation of workers is facing a future where they will be considered simply as commodities, labour power, to be bought and sold in line with demand, all human safeguards having been removed.

The movement

The movement against the new employment legislation was initiated by students at the universities of Poitiers and Rennes. Despite superficial resemblances, these students do not have the same profile as the relatively privileged students who took to the barricades in May 1968. Nowadays university students in France tend to come from the more threatened sections of that section of the working class known as “the middle-class”. Elite students usually go to the so-called ‘Grandes ėcoles’ where they are guaranteed access to a world-class education, contacts into the upper-reaches of the civil service and entry into well-paid jobs in multinational corporations. They are even paid a salary whilst they study. By way of contrast, students in the universities tend to finance their studies by doing Mac-jobs, grants being rare and piss-poor. About 40 percent of students drop out in the first couple of years, disgusted by the ramshackle organisation of the faculties and courses given by a small army of hourly-paid teachers who are already living in the state of insecurity that the young are fighting against. Those who do succeed in this often unimaginative system are usually rewarded by a succession of badly-paid or even unpaid training courses, quite rightly presented as an apprenticeship into the real world of work (exploitation).

It is this threatened section of the so-called “middle-class” which has finally come out in open revolt against the absence of perspectives which capitalism has been trying to get them to accept. What has surprised many commentators has been the brilliant organisation and determination of students formerly presented as apathetic and passive by their elders. Rather than seeking the help of professional politicians and full-time student unionists, the students set up their own system of co-ordination with elected delegates and they undertook mammoth debates on the issues involved in the new legislation. (Some of the debates lasted 72 hours.) Taking advantage of the new forms of communication offered by internet and high-speed trains they improvised a nationwide movement which quickly led to the closure of 60 of the 90-odd universities in France and the partial closure of dozens of high schools. The various attempts made to establish links with production workers have resulted in a spectacular leap forward in political awareness, workers suffering from poverty wages and unemployment having been invited to speak at student assemblies. Safety inspectors, experts on employment problems and workers in jobcentres have been given a chance to talk of their experience. Outreach into the high schools in the run-down suburbs resulted in the presence of thousands of black and Arab youths in the demonstrations, offering an apprenticeship in peaceful political agitation to youngsters subject to social stigma and popular prejudice.

Anyway, it was fun seeing the conservative government caught with its pants down. De Villepin’s authoritarian imposition of the new legislation via the undemocratic procedure of decrees failed to impress the masses. His popularity, never very great, is now in free fall and his political career is seriously compromised. Nobody ever elected him anyway. Chirac, a burnt-out old wheeler-dealer elected faute de mieux in a second round play-off with Le Pen, promulgated the CPE law while at the same time promising to amend it in such a way as to remove some of the more contentious aspects. In the end he had to withdraw it. The short-term winner has been Chirac’s sworn enemy and would-be successor, the insanely ambitious Sarkozy.  As you can imagine, the cartoonists had a field day and the only people not laughing are the leaders of the French ‘socialist’ party who are increasingly filling the vacuum in their political programme with precisely those Blairite nostrums that the young are refusing.

The moment the trade union movement was reluctant to get engaged in a full-blown conflict with the government. Doubtless this has something to do with the fiasco of its mobilisation to counter the government’s pension ‘reforms’ three years ago but it could also reflect the fact that the students have done a good job in discrediting the prime minister and dividing the government. However, the unions could have shown a little bit more muscle. Although the CPE has been withdrawn, the employers seem very attached to the CNE which constitutes a real threat to workers and, it may be added, to the ability of unions to organise workers. Indeed, the MEDEF, the bosses’ union, wants to generalise the CNE to all sectors and age-groups. 

The students, future workers, tried to expand their movement to incorporate all the various categories of workers but they clearly failed to generalize their demands adequately. Vague slogans against the precarious society more often than not failed to reach those workers who have been living from hand to mouth for some time. The reason for this is fairly simple: the general outlook of many of the poorer workers is constrained by the absence of qualifications and the urgent need to find cash. By staying largely at the level of a simple defence of their own immediate interests (in a movement which had all the strengths and weaknesses of spontaneity) the students were confronted by the rapid demobilisation of the movement as the examination season looms into sight. The movement was, after all, a student one albeit with a considerable amount of grass-roots support from the trade unions. The suspicion that the aim of the movement was simply that of defending the value of academic qualifications – what distinguishes the students from the unskilled workers – is, in this sense, inescapable. The unions, for their part, were only too glad to keep the movement within the narrow bounds of the defence of wages and conditions, notwithstanding the considerable level of economic insecurity which already exists. On the other hand there were many hopeful signs that the students were getting to grips with a more general malaise and that the movement was groping towards a wider perspective. It is at this point that the absence of a deeper understanding of what capitalism implies and of the need for a socialist movement embracing all categories of wage-earner was at its most glaring.

A Personal Note

I am not alone in having been taken completely by surprise by the students’ movement. The rapidity of its expansion and its extension to other categories in the population was nothing short of incredible. After the heavy and depressing riots of November with their mindless violence and undercurrent of racial tension, it has been comforting to see an outburst of political activity clearly directed against the poverty and loneliness of capitalist society. Despite the images shown on television, the massive demonstrations were on the whole good-natured and peaceful. The mixing together of young and old, and absence of sectarian politics, and the generally high level of debate was particularly encouraging. Although the movement has not taken a socialist direction, there is clearly a lot of discontent out there seeking a political expression and there does seem to be something of a resumption of the class struggle in Europe as a whole.

Malcolm Mansfield

Unemployment in Russia (1972)

From the May 1972 issue of the Socialist Standard

If, as the Socialist Party of Great Britain maintains, Russia is broadly State Capitalist, and, as Marx held, that capitalism breeds and needs unemployment why does there appear to be no unemployment in Russia? Is it, as members of the Communist Party claim, that the Russian planning system has abolished unemployment?

It is first necessary to recognise that the term unemployed has two meanings which overlap but are not the same. It means “not working” and also “out of a job”. The difference can be seen from experience in this country. Ideally, from the capitalist point of view all workers on the pay-roll would be fully and continuously working and as soon as work is not available they would be sacked and become out of work. For several reasons this is not always practicable. Owing to weather conditions, as in agriculture and building, it is sometimes impossible to carry on work out-of-doors and impossible to organise alternative work under cover. Also there are industries or services in which it is not possible to secure an even flow of traffic or even to foresee from day to day when the peaks will arise; inevitably therefore, there are periods in which workers on the pay-roll are unoccupied.

In the early post-war years when experience justified the employers’ belief that any falling off of trade would be short-lived it was a fairly widespread practice to keep some workers on in slack periods rather than face the possibility of being short of labour when the expected early recovery came. One of the reasons unemployment has jumped so much in the past few years is that the prolonged depression has destroyed employer’s confidence that recovery will come soon and their case for “hoarding” labour has disappeared.

Some, if not all, of these factors operate in Russia as in Britain. It is known for example, on the admission of Russian authorities, that in part of the Autumn and Winter a third or more of farmers on the state and collective farms have no work to do on the farms. (See Socialist Standard November 1968). There is also in Russia as in Britain a considerable number of workers unemployed in the period between changing from one job to another. Russian sources are quoted in Russia — a Marxist Analysis by T. Cliff to the effect that 36 per cent of the workers in certain areas changed their jobs each year and that the average duration of unemployment was 31 days.

Consequently, the claim that in Russia there is no unemployment and no workers out of a job is not to be taken literally, but this leaves to be answered the more important question why the cycle of expansion of industry followed by depression and heavy unemployment now strongly evident in Britain and elsewhere seems to be absent in Russia.

When Marx wrote about 19th Century British capitalism he assumed free market conditions of production for profit, a working class able to strike over wages, and that failure to make a profit would compel the individual capitalist firm to curtail production, sack workers or go out of business. Under war-time conditions with millions of workers in the armed forces, wages and prices controlled, maximum output demanded and profit guaranteed, unemployment fell to abnormally low levels (Under 1 per cent in some years). Some of these conditions continued after the war when maximum output was in demand to make good wartime destruction and under-investment, and unemployment remained abnormally low. In Russia where war damage and loss of life were incomparably greater the unsatisfied demand for output and the shortage of labour were correspondingly greater and lasted longer than in Britain.

But the great difference between Russian and British industry is that Russian centralised control and financing of production and foreign trade has the result that the failure of a particular factory or industry to maintain efficiency and make a profit does not put it out of business — the loss is borne by the national budget.

On the side of employment and unemployment the evidence is that Russian industry is heavily overmanned.

David Bonavia in the Times (2 February 1972) reviews the situation and concludes: —

  “Russia has no unemployment problem, as such, because it is illegal for an able-bodied person not to work, unless supported by a spouse. In practice this means that the state merely accepts the losses from an economic situation which would result in huge unemployment in the West . . . From the individual’s point of view, the Soviet approach to unemployment may be preferable, because it increases his security. From the point of view of the economy as a whole, it is a heavy burden to have large numbers of people drawing their pay for working useless or even counter-productive jobs.

Russian planned agriculture and promises of abundant food supplies have not prevented Russia from having to buy millions of tons of foodstuffs abroad. Recently, in spite of planned expansion of sugar production the Russian government has had to default on an agreement to supply Finland and is a big buyer in the world market. Above all the Russian claim that they had planned control of the monetary situation has seen the rouble become a black market currency in the outside world, selling at a fraction of its nominal value.

For Russia, as a world power, needing more and more to move into world markets, the key question is whether controls and planning can achieve the levels of efficiency of rival powers. In spite of boasts of surpassing American industrial output, the gap between Russia and the USA has not been closed and in the meantime Japan with half the population is fast overtaking Russia.

Edgar Hardcastle

UBI: Redistributing Poverty (2020)

From the May 2020 issue of the Socialist Standard

From Lockdown to Basic Income?

The acolytes of the fashionable radical idea of Universal Basic Income (UBI) must have been overjoyed by two recent news items. Apparently, the Pope has endorsed the idea. According to the Irish Times (13 April), ‘In a letter addressed to popular movements around the world, he expressed solidarity with their aim of bringing change to global systems and structures that exclude the majority’.

They report him as saying in the letter:

  ‘Street vendors, recyclers, carnival workers, small farmers, construction  workers, seamstresses, the different kinds of caregivers: you who are informal, working on your own or in the grassroots economy, you have no steady income to get you through this hard time… and the lockdowns are becoming unbearable. This may be the time to consider a universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out’.

This news was coupled with reports that the Spanish left-wing government has announced that it intends to become the first European country to implement UBI:

  ‘Minister for Economic Affairs Nadia Calvino said that UBI would be introduced “as soon as possible” and could be something that “stays forever, becomes a structural instrument, a permanent instrument”’.

Although, as advocates of UBI noted, ‘the payments will be targeted to families and will differentiate based on their “circumstances.” In practice, differentiating based on circumstances will result in means tests that fall on the poor’.

If it is targeted at families, not individuals, and is based on assessment, it would more closely resemble a Beveridge-style welfare state, than the full-fat version of UBI, something referred to as a Contingent Basic Income.

Redistributing poverty

The idea behind UBI is that every individual in a country is guaranteed a certain amount of income. In its most basic form, the state would simply send a payment to each person (much as the United States has done as part of its response to Covid-19 related unemployment). This sum is irrespective of employment or personal status. Fundamentally, it breaks the link between the sale of labour power and the ability to access necessary resources. It is simultaneously egalitarian and libertarian, since it avoids the need for state bureaucracy to carry out cheeseparing assessments and domination over individuals lives.

It also has the benefit of being easy to imagine, since it has the simple form of keeping commodity relations intact: it keeps the market in place. That is its chief problem: it tries to address the problems caused by a system that defines people by their property through giving them all property. Although it will give people money, those who own other types of property, such as houses, would be able to benefit from rents and market demand for goods they hold.

Hearne and de Ruyter estimate it would cost £540 billion to give everyone in the UK over 16 £10,000 a year (LINK). In 2017-18 the UK government tax take was £589 billion. It would be possible, but the government wouldn’t be able to do much else (which is why right-wing supporters like it).

Employers would be able eventually to lower wages, relying on the UBI subsidy to count towards their employee’s cost of living. In those terms, it would be a substantial transfer of wealth from firms that don’t need much labour to labour intensive industries (in particular, as many people focus on, the so-called gig economy of the likes of Uber).

We described this as the ‘redistribution of poverty’ in our classic pamphlet on the Beveridge Plan . That criticism stands true for UBI.

Flawed Acquisitive Notions

By concentrating on the surface phenomena of money and commodities, UBI ignores the social relationship behind in the form of value production. This comes to the fore when people start whining about ‘the incentive to work’ and the need to keep UBI so low that the lash of poverty can still be applied (surely if we were talking about incentive, doubling your income should be enough? That people might be assumed to prefer to not work and live on a basic income demonstrates the flaw in acquisitive notions of human behaviour).

People will need to work to make the taxes to pay for the UBI. Society and the employers would then be locked in a struggle over the share of wealth going to labour and the share going to profits. The only difference would be that the state would become a key battle ground instead of the labour market directly.

Likewise, the ideology of people getting something for nothing can cause resentment. We can see this sort of thing when Tories call for unruly families to be thrown out of council housing, as if it were a grace and favour home, rather than a right to housing. If UBI is seen as a gift, with obligation (as per the Contingent Basic Income idea), then it would not be supported by many of the population. Hence, also, why Donald Trump wanted to have his name on all the cheques sent out to Americans to cover loss of income due to Covid-19, he wants them to see the money as a gift from him.

Since some will be net contributors to the UBI, they will not perceive this as a benefit to all but a cross-subsidy, a gift they make to others, with corresponding obligation.

Although the reality is that the burden of taxation comes from profits, the structure of income tax nominally coming from employees creates an ideological value that deceives them into thinking they are paying for the government and therefore have a stake in it. In this case people would believe they were paying the income for those who earn less than them.

Universal Basis Services

Some, such as David Harvey, propose Universal Basic Services instead of UBI. This would be things like the NHS, free at the point of use. This has the benefit of removing the commodity character of the service, and would represent an improvement (though likely, in a capitalist world, to still be wrapped up in the struggles between classes over spending levels and coated in bureaucracy to control those costs). But if we had the political strength to impose substantial gains through UBS, we’d have the strength to abolish capitalism outright.

The post-Covid situation will be that millions will be out of work, and capital may not be readily available to provide new employment, as many firms go bust. Governments will have to find ways to keep social peace. They will take radical steps, throwing much market ideology to the wind, but they will be doing that to maintain the advantage of the owning class and rejuvenate market society, as they did after the 2008 crash.

Pik Smeet

Aspect: Capitalist education (1970)

The Aspect column from the February 1970 issue of the Socialist Standard

Socialists have no illusions about the role which institutions like the universities have to play in class society. Like the government and the churches they serve the interests of the ruling capitalist class.

The basis of modern society is the ownership of the means of production by a section only of society and their consequent use to make profits for those owners. The rest of us, cut off from ownership, have to sell our mental and physical energies in order to live. We, who make up over 90 per cent of the population, alone produce all the wealth of capitalist society.

The time has long since past when the capitalists themselves took any part in production. They have long since become redundant parasites, employing specially trained wage-labourers to perform the jobs, in the administration of the State and the management of their businesses, which when capitalism was younger they used to do themselves.

Modern society and industry is now run from top to bottom by paid members of the working class. All the jobs in the administration, planning, production and distribution of wealth are carried out by workers.

The glaring contradiction in modern society is between large-scale social or co-operative production and the outdated sectional ownership of the means and instruments for producing wealth. Class ownership has become an anachronism that is holding back the use of society’s wealth to provide plenty for all.

So what have we got? A modern technology capable of providing abundance. Workers capable of operating this highly-developed industrial system, yet doing this in the interests of a non-working, owning class who want their means of production geared to profit-making. But whether these are used to make profits or to satisfy human needs the technology is the same. Thus, the owners face the problem of training workers to administer and operate modern industry.

At one time the task of schools was merely, by means of religious indoctrination, to break in the children of the working class to the sort of discipline and hard work they could expect when they went into the factories and mills and mines. But with the growing application of science to production the employers required more and more specially-trained workers. In 1870 the State brought in compulsory elementary education. More money was spent on technical schools. Soon, a three-fold division emerged in education: Elementary schools turning out factory workers; secondary schools turning out clerks; and the public schools teaching the children of the ruling class to be the rulers. This division was recognised and enshrined in the 1944 Education Act which made secondary education compulsory.

Compelled by economic necessity to spend money through the State on education, the capitalists came to expect more of schools than mere indoctrination. They wanted to turn out workers who understood what they were doing in the factory or office. They wanted, in other words, an educated or rather a trained working class.

Hence, in capitalist society, money spent on education comes to be seen as an “investment”, the return on which can be calculated in commercial terms. The educational system becomes the “education sector” of the economy or the “knowledge industry”. Thus Lord Butler, former Tory politician now an academic, can write about students “as the type of capital investment which will accrue with every year” and which has “enormous value” (The Times, 20 November 1968). Labour Ministers are not different. Gordon Walker, who used to be Education Minister, wrote in the Financial Times (11 March 1968) about the colleges of education achieving “a striking increase in productivity”, that is, turning out more teachers per £ invested.

People like to think of education as something outside the commercial world where human rather than commercial values are taught and learned. Thus all this talk of “investments”, “industry” and “productivity” in connection with education seems offensive and cynical. But Butler and Gordon Walker are being realistic. They are telling the truth. What is called education is today prostituted to the service of capitalist industry and its profit-making, pandering to its manpower and research needs. Education today really is an industry, a sector of the economy turning out a certain kind of product, whose performance is judged on the rate of return it brings on the capital invested in it.

This, of course, applies equally to the universities—though how they were captured by Big Business is another interesting story.

For universities existed before the rise of capitalist industry. They came into being in the Middle Ages as centres of religious learning where people could study theology, law and medicine. Indeed up until the end of the 18th century nearly all graduates were Church of England clergymen and until 1871 acceptance of the 39 Articles was a condition for going to a university (the poet and revolutionary Shelley was expelled from Oxford in the 1820’s for being an atheist). In the last century Oxford and Cambridge, the main universities, were institutions turning out Anglican clergymen and top civil servants. Since at that time the governing class still managed its own affairs, their role was to train the ruling class to rule.

Capitalist industry was faced with the problem of turning these bastions of aristocratic privilege into the knowledge industry, of driving out leisurely learning for its own sake and replacing it by business and technical training. Many of the early manufacturers were non-conformists and so were barred from Oxbridge. They therefore used their money to set up their own rival institutions—the redbrick universities—where the emphasis was on science and commerce rather than on Latin and Greek. The capitalists denounced the old universities as “a collection of books” and “a place where nothing useful is taught”.

This was an ironic situation. The mediaeval origins and traditions of these old universities, geared to serving a leisure class, made them value learning as such and resist the capitalist pressures to reduce them to the simple task of training managers, engineers and technicians for capitalist industry.

Traditionally, then, the universities were attended only by the sons of the rich, and especially Oxbridge by the idle sons of the idle rich. This is no longer so. Part of the money invested in education goes to provide grants for children of the working class to go to college. 90 per cent of students are the sons and daughters of workers maintained at college out of local authority grants. When after three or four years training they leave university, they enter the labour market just like someone leaving school at 15. Thanks to the capital invested in them, their ability to work is more valuable and so they can get a higher wage. But wage-workers they still are. The labour market for graduates is conducted partly through the advertisement columns of papers like the Daily Telegraph, the Times, the Sunday Times and the Observer, but now increasingly capitalist firms are entering the universities and trying to sign up students even before they graduate.

Make no mistake about this: students come from the working class and are merely being trained as special high-grade workers who still have to find an employer to live. Most students come from the working class and are being trained to fill the top posts in the State and industry.

Universities are capitalist bodies geared to producing valuable graduates for the employing class to exploit. So it is not surprising that these students who have seen this can only regard as hypocrites those academics who proclaim that the universities are “republics of learning” or “communities of scholars” dedicated to seeking after Truth. Students have every right, like other workers, to protest about being treated as an “investment” and judged merely from a profit-making point of view.

Adam Buick

How the market doesn’t work (2006)

From the April 2006 issue of the Socialist Standard

When you’re out on the stump discussing capitalism – face-to-face or on-line – you can guarantee some defender of the system that has left a third of the world population without clean water, nearly a sixth without enough food, and wrought megadeaths upon megadeaths from wars within the last hundred years, will try and point out how the market is the most efficient system for allocating resources. A self-correcting mechanism without which we would all descend to barbarism and all advanced industry and technology would utterly cease to be. Leaving aside that the cogs in this marvellous mystery self-regulating machine are human beings who must be ground out to make it run smoothly, such a picture of the market system is quite, quite wrong.

A clear example stands before us from the recent news. Over the past year, television and radio has been reporting how people in well-paid City jobs have been leaving to become plumbers. The shortage of those skilled tradespeople has meant, according to market forces, that the price of their labour has risen. Accordingly, the price of a plumber’s labour or labour power (depending on whether they are self-employed or not) has risen to attract more people into the trade to fill up the gap between supply and demand. All of this sounds exactly like the market functioning perfectly.

The problem is that, at the end of January, BBC radio reported that the market for plumbing skills has become glutted – so many people were attracted into the trade that now there are more plumbers than there is work available. This can happen because, far from being the perfect mechanism for conveying information, the market can only convey information at the speed of trade. Prices will not be lowered until the plumbers start entering the market and begin lowering their prices to tout for trade against stiff competition. New entrants to the market will not be able to see that supply has been fulfilled until after the prices start to fall. People just entering training – having heard the word on the street – will not know until they are finished that the bottom has fallen out of the market, and that the arrival of them and their class mates has caused this.

However, even if some sort of mechanism was applied to coordinate between different branches of production, the problems of capitalism would still occur. Otherwise the state capitalism in the former Soviet bloc would have never collapsed and its system would have been seen to be more sturdy than the Western variety. Even with the greatest planning in the world, accidents happen, things change and perfect coordination is rendered impossible. The problem lies much deeper than that, though, in the very nature of capitalism itself.

If the plumbers could simply jump from the plumbing market to a different trade without any difficulty, there would be no problem – they would still be able to acquire the necessary use values with which to live. The problem is, however, that these workers have invested money that they need to recover – both in terms of paying for training and of earnings and promotions they would have gained had they stayed in their old careers. They have invested money in order to enter into the market, and in many cases may well have borrowed as well as using up their savings. In order to ensure they do not make a loss (which will risk their homes and families) they need to ensure that they get that money back – they have to return their initial investment back into its original form as money.

Many plumbers will be unable to do this, and will find themselves driven out of business, based on nothing but the mistiming of their investments and their inability to lay hands on cash. It will not necessarily reflect on their plumbing skills, their personality or anything about them, but simply the blind workings of the market. In order to obtain use values – the things they need with which to live – they must secure exchange value. To stay in business, though, they must use some of the money – exchange value – they earn to pay debts or to ensure they are not out of pocket.

This process, or turning useful things back into exchange value, distinct from the particular usefulness of any given thing, is the essence of capitalism. Anything that interrupts this process puts a spanner in the works of that shiny self-regulating machine – and miscoordination based on poor information is just one such (common) spanner. Whilst our example here is small affecting only a few thousand people at most, obviously, a major capitalist concern could lose billions of pounds and wreak havoc on millions of lives.

Some sharp-eyed pro-capitalists – skilled in misdirecting arguments from points on which they are losing – may choose to suggest that we have here accepted an important point of theirs. These people, they will claim, are willing to do the dirty work – the plumbing – solely because the price is right and they have been lured into the trade. Such nimble minds would actually find themselves too fast for their own feet. Many of the bored office workers (interviewed by journalists, another species of bored office worker) expressed their pleasure that they would find the work interesting and fulfilling, and that it was because the work paid a decent wage now that they were able to enter that trade.

So, in fact, it proves precisely our point once more – the requirements of exchange value hold back the natural co-operation and ability and desire to work of human beings, rather than enabling it. Socialism would be as prone to nature and accident as any system and so could miscalculate and produce too much of something. But as it would not be hamstrung by turning things into exchange values as capitalism is, it could just write off any waste as a misfortune to try and be avoided, rather than one to be exacerbated and spread by sackings and bankruptcies.

People’s skills could be used when required and people would not find themselves dumped on the rubbish heap and denied access to their necessities of life just because they had worked hard and finished the job or because less of that type of work were no longer required. We would be able to enter into an age where communication conveyed at the speed of light could be used immediately, without having to be grafted onto the old operating system of society – like trying to read the internet on a pocket calculator.

Pik Smeet

Cooking the Books: Capital Needs Labour (2015)

The Cooking the Books Column from the July 2015 issue of the Socialist Standard

The Tories, Labour and UKIP all say that immigration is a ‘problem’. As this is repeated by the media most people seem to think so too. But it is not immigration that is the problem. It’s xenophobia that sees it as one. Even from a capitalist perspective – let alone the socialist one which sees all workers as part of a worldwide class with a common interest – immigration is a good thing. This is well explained in the chapter on the subject in It’s the Economy, Stupid: Economics for Voters by Vicky Pryce, Andy Ross and Peter Unwin.

If workers are migrating to a country that means there are job opportunities there. In other words, that the capitalist economy is expanding there. As the authors point out:

‘ … if an area of the economy is expanding it will tend to have increased job vacancies and higher wages. Most fluctuations in migration levels are economic, and so such an area will tend to attract more immigrants and more incumbent labour’.

If they were logical – or rather, if they weren’t vote-catching politicians – Cameron and Osborne ought to be celebrating the figures showing increased immigration as a sign that the British economy is recovering from the slump. But they don’t, at least not in public.

Most migrants find jobs in the private sector, where employers only take on workers if there’s something in it for them – profit. The authors express this in this way (they are orthodox economists):

‘… immigrants are only employed in the private sector if they produce more than they are paid, so this ‘surplus’ productivity flows back into the rest of the economy’.

In other words, immigrant workers like local workers produce more than their keep, even if this surplus is pocketed in the first instance by their employers who hand over a part to the state as taxes before being able to re-invest any in expanding production with a view to profit.

One person who has openly recognised the link between immigration and an expanding economy is Tony Blair, but he’s no longer a serving politician who needs to think of votes. In the run-up to May’s election he undermined Miliband’s bid to garner anti-immigrant votes by saying, in the words of a headline in the Times (16 March), ‘I was right to let in eastern Europeans’:

‘The former prime minister rejected those, like Ed Miliband, who claim that the party was wrong to open the doors to workers from new EU members in 2004 rather than adopting temporary controls. He argued that, at the time of the decision, the UK economy was “booming” and needed “skilled workers from abroad”’.

Under capitalism labour, or more accurately labour-power (ability to work), is a commodity. Since new wealth, including more profits, can only be created by the application of this commodity a ready supply is essential to capitalism and its imperative to accumulate more and more capital. Before Britain joined the EU in 1974, while Germany, France and the Benelux countries got their extra labour from Italy and France’s colonies in North Africa, Britain got its from Ireland, the West Indies, India, Pakistan and other parts of its old Empire. After 1974 Britain’s source of extra labour shifted to Europe and, from 2004 when they joined the EU, to the countries of eastern Europe.

Even if British capitalism withdraws from the EU it will still need an outside source of extra labour. In any event, we will risk a prediction: Cameron won’t be able to cut back the movement of the commodity labour-power to Britain to the levels he has pledged, at least not unless he is prepared to hold back the accumulation of capital in Britain.