Review: April 1972 (1972)

The Review of the Month column from the May 1972 issue of the Socialist Standard

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The cruelest month brought yet another bout of misery for workers who rely on the trains to get them to and from work, as the railway workers went slow in an effort to get some results on their pay claim. There might be some argument about whether the railmen were well advised in their handling of the episode in which Alex Jarrett awarded them a rapid 12½ per cent. That would be a matter of tactics. What cannot be in dispute is the fact that here we have another section of workers who are struggling to arrest a lowering of their living standards. In view of the recent history of the railways, which has been one of cut back and decline, they may well be trying to hold back the tide; but theirs is a struggle which all workers should support. And in giving this support workers should not be in the slightest impressed by the cynical mouthings of the press and of official spokesmen, who express such concern over the “suffering of the public”. To take only one example, British Rail have not considered public interests when they have decided to shut down lines; they have been concerned only with the profitability of the railways. That remains their concern and that is why they are fighting the railmen. In the confusion of the struggle, the essential facts must be kept clear.

Of course the government claimed that their stand against the railway workers was a matter of principle—and any worker who still accepts that capitalist politicians have such things may have believed them. Yet they showed again, how flexible their “principles” can be, when they agreed to pump more money into the Harland and Wolff shipyard in Belfast. Those with a memory which goes back to June 1970 will recall that the Heath government was going to make capitalism a joy to live in by the simple process of refusing to support lame duck firms and industries and making all of us stand firmly on our own two feet. This policy took a knock when the government virtually nationalised Rolls Royce; now there is another example, in the case of Harland and Wolff. The plain fact is that modern capitalism runs on a large measure of government interference in, and support of, private industry. When the Tories pretend otherwise they are merely playing for votes by ignoring facts.


Abroad

Vietnam forced its way explosively back into the headlines it had been kept out of by Northern Ireland and all the other news items about the current violence of capitalism. As Nixon prepares for his re-election campaign, it may be remembered that in 1968 he seemed quite sure that his administration would not have too much difficulty in finishing the war, which seemed at that time to be about to drag on for ever. With the approach of election year, Nixon has put in force a policy of training the South Vietnamese to fight the war themselves on the ground, with support from American aircraft and “advisers”. This policy has now been exposed, like the rest, as impotent. Nevertheless, we can depend on it, that in November there will be more policies, more plans, more vote-catching promises. None of them will deal with the reality, which is that the war in Vietnam is another of the conflicts which spring from the essentially divisive nature of capitalist society. It should not matter to workers, what nationality of people it is that fights a war; as workers their interests are the same. War is unavoidable in a capitalist society and workers everywhere should unite to end the system.

Politics

Another great split in the Labour Party, bringing back memories of the days of Aneurin Bevan, although elegant Roy Jenkins is of course much more acceptable in the vote-floating areas than was Bevan, who might sometimes sound as if the Labour Party was in opposition to the Tories and who could therefore be a bit of an embarrassment. At least until he learnt his lesson at the famous Brighton conference in 1957.

The latest split came over the issue of a referendum on the Common Market. Recently a group of Labour M.P.s have been agitating for this, completely ignoring the fact that when they were in power they were trying to push through membership of the Six without any talk of a vote on whether the workers wanted such a thing or not. Apart from this, the Jenkins rebels are fighting over the Labour leadership, however much they protest, hand on heart, that nothing is further from their intentions. This is not a battle over principles, since neither side have any to fight over. It is at best a struggle over an issue of capitalism—whether and how the British capitalist class should join a trading combine of other capitalist classes on the Continent. It is of no consequence to workers whether their rulers join any such combine; neither is it of any consequence how the affairs of that combine are handled. Jenkins may or may not improve his career prospects as a result of his resignation; the real issue for workers is whether they will continue to stand for capitalism, with its trade and its conflicts and its cynical leaders.

Cooking the Books: From Lame Ducks to Zombies (2012)

The Cooking the Books column from the November 2012 issue of the Socialist Standard

Apologists for capitalism are quite cruel to firms that don’t make a profit or not enough profit. In the 1970s they were called ‘lame ducks’. In the harsher climate of today they are called ‘zombies’. Lame ducks can be left to die, but zombies have to be killed.

“HELP,” read the headline of an article by the Times Business Editor, David Wighton, on 19 September, “ZOMBIES ARE ATTACKING THE RECOVERY” He was discussing a theory put forward by some economists as to why “employment is strong but output is weak and investment sluggish”. According to them, given that “output is still more than 4 per cent down on its peak in 2008”, unemployment ought to be higher than it actually is. That it isn’t, they suggest, is because not enough firms have gone bankrupt when they should have done:

“These corporate zombies are so weighed down with debts to banks and their own pension funds that they are barely alive. But, as in the movies, they are hard to kill.”

… zombie businesses may have enough cash coming through the door to stay alive but not enough to thrive. They simply don’t have the money to invest in long-term growth.

In other words, these are firms that are still making a profit but not enough. Normally, says Wighton, they would go under:

In normal downturns these companies would be subject to the forces of ‘creative destruction’ that drive market capitalism. The undead would be restructured, with debt written off, or broken up with their assets sold to other businesses that could afford to make better use of them. Many would die and be reborn as much healthier businesses.

This is indeed one of the things that happen in a slump to create the conditions for a recovery. Unprofitable firms go bankrupt and their assets pass cheaply to others. In Marxist terms, this is capital getting devalued, which means that with the same income the rate of profit is raised, which is a must for a recovery. Insofar as government action prevents this – and Wighton mentions that the current very low interest rates have allowed firms to keep up with their interest payments even though they have no chance of repaying the loan – it would delay any recovery.

Wighton’s economists want the zombie firms to be killed off but are afraid that the politicians won’t be ruthless enough and will allow these firms to stagger on, leading to what happened in Japan in the 1990s, its so-called ‘lost decade’ of stagnation.

Could they be right? The argument is plausible in terms of the way the capitalist economy works. If not so much capital is devalued in a slump then restoring the rate of profit risks taking that much longer. If they are right, the choice capitalism has to offer in the immediate future is either more closures, more redundancies and more unemployment or a prolonged period of stagnation. Some prospect! And further proof that capitalism has nothing to offer the majority class of wage and salary workers and their dependants.

World at Work: R.R. Joins B.R. (1971)

From the March 1971 issue of the Socialist Standard

The Rolls Royce affair is a practical example that nationalisation is vital to capitalism and has nothing to do with Socialism. In this case it appears to be a means of keeping in being production facilities which supply vital equipment to the armed forces of eighty or more countries and over two hundred airlines, while avoiding liabilities for losses expected by some sources to run up to £400m. Governments do not run capitalism; in fact it runs them. This comes out clearly in the Labour-Tory wrangles over who is to blame. Labourites point out that a previous Tory government has involved the taxpayer (read capitalist class) in paying out hundreds of millions of pounds extra costs over the Concorde treaty with France. Tories fume at being forced against their cherished political nostrums to nationalise Rolls-Royce. There are lessons in all this for the working class about the world they live in.

How was it that one of the world's largest aeroengine makers went bankrupt? In 1968 they won the contract on which the fatal trouble occurred to supply engines to the American Lockheed company for its Tri-star Aircraft. At the time it was considered a major triumph for British industry and the Labour government’s policy of promoting the growth of what they called high technology. As it turned out the development costs of the engine were to be much greater than originally calculated; production costs had risen and there are some unsolved technical problems causing delays involving penalties for late delivery. This is not unusual for this type of work and it has been pointed out that had the same contractual obligations applied to the Concorde project Rolls-Royce would have gone bust sooner. Lockheed have not been free of trouble: on one government contract costs had risen by three and a half times over the original estimate and their bankruptcy has been expected for some time. The American government share the problem of their British counterpart of how to keep a leading defence contractor in business.

It may seem that all this has come about as a result of bungling and incompetence. Those who hold this view must explain why Rolls-Royce was for so long a model of all that was best in capitalism. That is, it was profitable, its shares had an international clientele, as had its products. It was reputed to have the finest computer installation in Europe. As for labour relations it was a model that co-partnership proponents could point to. Over 4,700 of its employees held ordinary shares in the firm. Another ten thousand held special workers’ shares. Not that it was a small family firm. Rolls Royce employed nearly eighty thousand workers throughout the United Kingdom. As a result of mergers, takeovers and government reorganisation of the aero-industry, Rolls Royce became in recent years the sole aero-engine manufacturer in Britain. It may be said that with almost everything working in their favour Rolls-Royce still went bust. It could be said that other industries that have ended up nationalised had been among the front runners and become unable to compete with newer rivals while still important to the capitalist class. Events caught up with Rolls-Royce a little earlier.

Much of this is evidence of the contradictions that fetter the development of capitalism. Goods and services are produced for sale on the market with a view to profit. This generates competition and a drive towards the concentration of industry into huge groups or combines. This applies to the aircraft industry where competition has produced a demand for larger and faster passenger planes.

With each development came the need to spend more on research in order to bring into production larger and/or faster planes to render those in service commercially obsolete. Few firms are able to command the resources to keep in the race with hopes of huge profits or bankruptcy. It would seem that Rolls-Royce for all their resources can no longer do it. More correctly, the British government that backed it was no longer able or willing to risk the resources on such an increasingly large scale.

Nationalisation may help keep the weapons of war at the ready and airlines throughout the world flying. For those workers who don’t lose their jobs there is likely to be little joy. Those at the Rolls-Royce works at Crewe and Derby must already know that nationalisation in no way changed the social position of workers in the railway workshops there. They remained wage slaves.

One last point it is worth noting. Parliament can move fast when it comes to protecting ‘vital defence industries’. On the same day that it was announced that time would be found to get the nationalisation through in a week, pensioners were told that they may get an increase in six months time. That is what is known as getting your priorities right.

Ad Mad

Among the letters to the editor published in the Times on 2 February was one expressing deep concern at an act of Government discrimination against one national newspaper — the Morning Star. It continues

   For many years Government departments whose advertising is placed through the Central Office of Information have refused to advertise in the Morning Star

as a result no adverts on the technicalities of decimal currency have appeared in the Morning Star, with the result that

  Its readers are thus being denied information made accessible — to readers of other national newspapers and relating to the most important change in our monetary system for ages.

There are two points worthy of comment in the above extracts. Firstly the Morning Star is known to be closely associated with a political party claiming to be Communist and allegedly basing its policies on the teaching of Karl Marx. One of the main tenets of this body of theory is that the machinery of government known as the state is an instrument of coercion used by a ruling class to maintain its privileged position over the rest of society. Is it not odd that a journal claiming to champion the interests of the working class should seek financial support in the form of advertising revenue from the executive committee of the ruling class? The signatories overlooked one great lament the political left make about the press is that financial dependence on advertising must lead to compromise in editorial policy — not that we would expect the Morning Star to compromise one dot or comma of their support for the policy of the British road to State Capitalism. (Not for all the Gold in Westminster.)

The Socialist Party of Great Britain makes use of advertising as a means of getting the party, its activities and publications known. However we consider that our object Socialism calls for uncompromising opposition to capitalism, its political parties and governments. Hence our publications are not open to advertise the activities of those we oppose. This brings us to the second point. Why is a paper claiming to base itself on Marxian policies wanting to advertise details of currency reform? After all, the abolition of private property in the means of production implies no more buying and selling and no more need for money. Maybe we are not being fair to the Morning Star. It is possible that they knew nothing of the letter and that the signatories, including such prominent trade union leaders as Briginshaw, Daly, Jenkins and Scanlon, acted independently. May we give due notice to these latter-day practitioners of 'the fair day’s wage for a fair day’s work’ policy that the implementation of the socialist principle of ‘free access according to need’ will not require a vast advertising campaign. This revolutionary measure can only be introduced by conscious majority action. That is, its implications must be understood before it is put in practice, not afterwards.

Joe Carter