Planlessness (2026)

Book Review from the January 2026 issue of the Socialist Standard

The Economic Consequences of Mr Trump: What the Trade War Means for the World. By Philip Coggan. Profile £7.99.

A first reaction to this book is that it was likely to be out of date by the time it was published. Given Trump’s tendency to change his mind, anything said would probably no longer apply after a month or two. The author does indeed record Trump’s decisions about tariffs and his repeated revisions of them, describing him as ‘a man without a plan’ who based the calculation of tariff rates on an absurd formula. But he also notes some ideas that underlie Trump’s policies.

The main reason seems to be the intention to return manufacturing industries (and jobs) to the US, but this is unlikely to be successful. In 2013, as an illustration, Motorola opened a smartphone factory in Texas, but it closed after a year because of high costs. Even when it does pay off, building new factories takes time and the US has a shortage of factory workers; they might come from abroad, but of course Trump is clamping down on immigration. The US will simply not re-enter ‘a golden age of manufacturing employment’.

On the whole Coggan adopts an orthodox economic perspective, arguing, for example, that tariffs interfere with market signals about the causes of rising and falling prices. Tariffs have varied over the centuries and protectionism was more widespread between the two world wars. But since the 1960s tariffs have generally been falling, from a global average of 14 percent then to 10.9 per cent in 2000 and 2.5 per cent in 2021. Free trade, he says, is good for an economy, though there has rarely been completely free trade.

One good point he makes is about the interconnectedness of global production, with long and complex supply chains. An iPhone is based on 187 suppliers across twenty-eight countries, while cars imported to the US from Mexico consist largely of components made in the US. Around eighty per cent of the toys sold in US shops are made in China, so the massive tariffs Trump wanted to impose on imports from China were a non-starter, and they have now been scaled back in a major way. American workers are already complaining about higher food prices as a result of the various tariffs, such as bread doubling in price (Guardian 19 October).

The whole world, Coggan suggests at the end of this short volume, ‘will suffer the adverse economic consequences of Mr Trump’. But really these are the consequences of the capitalist system, not the result of the idiosyncrasies of one man.

Paul Bennett

Labour's failure (1986)

From the September 1986 issue of the Socialist Standard

The Labour Party assert that what makes them different from the Tories is their belief in government-directed planning for all aspects of production — which industries shall be encouraged to expand and which to contract and how much all of them shall produce. The aim of such planning is to secure maximum total production; wages as high as possible and. of course, "full employment". On the other hand, the Tories would leave it all to market forces with the managers of industries making their own decisions about how to react to market changes in demand. For the Tories, government intervention would be restricted to promoting competition, as the way to reduce costs and prices and enable British industry to be competitive in world markets.

The Labour Party's ideas were embodied in The National Plan, a volume of nearly 500 pages, adopted as official policy by the Wilson Labour government in 1965. The ineffectiveness of Tory policy has been shown by, for example, the increase from 1⅓ million when they entered office in 1979 to 3½ million seven years later. One of the factors in the increase in unemployment has been the long-term decline of British manufacturing industry. Some of present unemployment is due to world recession, the rest is due to the shrinkage of manufacture. In 1900 British exports of manufactured goods represented 33 per cent of the world total of such exports. In 1965 it was down to 14 per cent and is now about seven per cent. On balance Britain is now an importer of manufactures. It was noted in the 1965 National Plan that the British share which was a quarter of the world total in 1950. had declined by 1962 to less than one sixth. The extent of the decline can be seen in a comparison between Britain. Germany and France. In 1951 British total production was equal to that of Germany and France combined. In 1985 German production was three times what it was in Britain and French production nearly double that in Britain.

The problem had been considered in 1931 by the MacMillan Committee on Finance and Industry. The committee accepted that the decline had taken place but took comfort in the fact that British exports of manufactures were still the largest of any country in the world and that British wage levels were the highest in the world except the USA. British wage levels are now the lowest in Europe except for Italy and are far below those in the USA. Japan and many other countries. The MacMillan Committee also pointed out that. "The USA is unable to compete with us in world markets in our principal staple exports such as coal or textiles and many iron and steel products".

There are now many countries which can undersell British products in all these fields. Textile exports have been drastically reduced, coal can now be imported at prices below those of British coal and the exports of British coal, once enormous, have reduced almost to vanishing point. The MacMillan Committee were complacent about the future. They took the view that "the shortcomings in this country in technical efficiency" were exaggerated, though they also recognised that the high level of unemployment in Britain (1,290,000 in 1928, compared with 432,000 in 1913) had already come into existence before the depression which began in 1929. In the depression itself it rose to 23 per cent. not far short of double what it is in 1986.

The Labour Party's justification for the 1965 plan was that 13 years of Tory rule had made the problems of British industry much worse. A Labour Party pamphlet summarising the plan had this:

In 1964 the crisis was reached: the Balance of Payments deficit was about £756 million — the largest in Britain's peace-time history. Years of stagnation had taken their toll. Once more an emergency squeeze was needed; but this could not be the final remedy. This time we could not be content with the old "stop-go" cycle. A new plan of action was needed

(Target 1970)

The plan was drawn up after consultation with the trade unions, employers' organisations and big employers, who were asked what expansion of production was possible in the five years to 1970. The plan itself settled on a 25 per cent increase in total output, with a 20 per cent increase in wages. It planned to avoid inflation: prices were to remain stable. It included particular forecasts such as raising the annual rate of housebuilding to 500,000 a year. A remarkable feature of the plan was its assumption that unemployment was not a problem but that there was an absolute shortage of workers. The plan foresaw that 800,000 additional workers would be needed by 1970, 400,000 of which would come from the increase of population. The remaining deficiency of 400,000 workers would have to be met, as much as possible, by increasing the output of the workforce.

This showed an astonishing, but typical, failure of the Labour Party to understand capitalism. In effect it assumed that all that had to be done was to increase output and that the real problem, of selling the increased output at a profit, would look after itself. In particular it showed no awareness that unemployment in this country, after the abnormally low rates of early post-war years, was already on a long-term upward trend. In the event production increased between 1965 and 1970. by about half the planned 25 per cent forecast and the actual increase was less than the increase that had taken place in the previous five years under the Tories. Only half the 500,000 houses a year were built. The plan failed entirely to keep prices stable. They went up by 31 per cent and wages, after discounting the rise of prices, rose by about two-thirds of the planned 20 per cent. And contrary to the belief of the planners that there would still be a 200,000 shortage of workers, it was unemployment which went up by 200,000. from 376,000 to 579,000.

The plan accepted that there would be some industries in which more workers would find jobs and others in which the number of jobs would fall. They were right about an increase in the number of jobs in the Health Service, education and insurance, banking and finance but they got it badly wrong about manufacturing industries. Halting the decline of manufacture was one of their main concerns and they planned an increase in the number of jobs by 292,000. Instead the number of jobs in manufacture fell by 260,000. The plan had no effect at all in increasing total production but some boards of directors of companies, including some in the manufacturing industries, were encouraged by it to step up their output. What happened in manufacture was that profits, which had been steadily failing since 1951, fell further during the five years of the plan.

The method of preparing the plan had been to ask companies to forecast what types and designs of products they would be turning out in five years' time and in what quantities. Some companies regarded the whole thing as being unrealistic to the point of farce. What types and what quantities will be produced in five years' time depends on what demand there will be in the market, something no company can possibly know in the inherently unstable world of capitalism. How many of the many tens of thousands of companies which have gone bankrupt in the depression since 1979 could see it five years in advance?

The plan accepted that some industries were in decline and would need fewer workers. Among the industries in which jobs would decline were agriculture, coal mining and transport, the planned number of redundancies being 142,000, 179,000 and 99,000 respectively. Based on their assumption that there was an overall shortage of workers, the plan described redundancies as "releasing” workers for employment elsewhere. No doubt many of the redundant workers did find other jobs for a time at least. To ease the transfer, the Labour government passed the 1965 Redundancy Payments Act. Of particular interest is the coal industry One of the factors expected to reduce the number of coal miners' jobs was the expansion of nuclear power. Dungeness "B" nuclear plant was expected to "produce base load electricity more cheaply than a contemporary coal fired station. The number of coal miners who lost their jobs under the Labour government was 199,000, twenty thousand more than the government had planned. They lost their jobs because the pits in which they worked were running at a loss.

Here is the statement about loss making , pits made in the National Plan.

The aim of the industry will be to eliminate inefficient capacity, rather than to under-utilise efficient capacity, in order to keep costs down as far as possible and to match the falling level of demand. Pits where proceeds of sales fall short of mere running expenditure are being closed down as quickly as possible, unless there is a prospect of their moving out of this category, e.g. after a reconstruction is complete. These measures should lead to a compact and competitive industry still supplying more than half the nation's energy and offering attractive jobs.

It will be observed that this is almost identical with Ian MacGregor's pit closing formula for getting rid of 40,000 miners which led to the year long strike in 1985.

There was no strike against pit closures in 1965. Indeed the minister in charge of the plan, the late George Brown, when introducing it at the Labour Party Conference received a standing ovation. Evidently the Labour Party and trade union delegates, and the workers they represented, all shared the illusion of their leaders, that "full employment" was a reality and that they would never have to fear the dole queue.

Edgar Hardcastle

Cooking the Books: A fool’s errand (2025)

The Cooking The Books column from the June 2025 issue of the Socialist Standard

‘Farage woos red wall with vow to reindustrialise UK’, read a headline in the Times (16 April). According to the journalist:

‘At a working men’s club in Newton Aycliffe, Co Durham, the Reform leader made his most audacious attempt yet to outflank Labour to its left on the economy, praising trade unions and calling for the return of nationalised heavy industry, coal mining and oil and gas extraction.’

This could be read as saying that Farage called for the return of nationalised coal and oil and gas. Actually, he has only called for the nationalisation of one steelworks called ‘British Steel’ and not even for the nationalisation of all steelworks in Britain. It is true, though, that he has called for more manufacturing and heavy industry in Britain and for allowing privately-owned coal mining and more drilling for oil and gas in the North Sea.

It is a long time since the Labour Party has committed itself to trying to revive heavy industry in Britain. They have accepted the evolution of British capitalism towards capturing a share of world surplus value through financial services. Only its rather reduced left wing still dream of this. Here is Eddie Dempsey, Mick Lynch’s successor as General Secretary of the RMT union, writing in the Morning Star (3/4 May):

‘Thatcherism ripped up the industrial foundations of this country… We were left with a service and big-finance-dominated economy with communities stripped of stable work, identity and any real power to determine the course of their lives… The antidote is an organised economy and a wider society with a strategic role for the state driving investment with credible industrial planning to bring back high-quality jobs and good housing’.

It can be seriously doubted that Farage wants to see such a state-capitalist system introduced. If he did, he would indeed ‘outflank the Labour Party to its left’. His is just populist demagoguery. What he is plainly trying to do is to exploit for vote-catching purposes the loss of ‘stable work, identity and real power to determine the course of their lives’ felt by people living in areas formerly dominated by heavy manual work.

Farage has given no details of how he would bring about a reindustrialisation of Britain. Understandably, since private enterprise, which he favours, will only invest if there is a prospect of making a profit that is more than minimal. The domination of heavy industry in parts of Britain ended precisely because the industries concerned (coal mining, steel making, shipbuilding) were no longer profitable in the face of competition from cheaper producers in other parts of the world.

He could say he would follow Trump and seek to make heavy industry profitable by erecting a tariff wall around it but dares not because this would make no sense in a country so heavily dependent on international trade as Britain. Besides, it is not what those who fund Reform UK want. They are financiers whose priority is to be able to carry on their financial wheelings and dealings, internationally as much as nationally, without state regulation.

Dempsey will be sincere. But if tariffs are ruled out (to which he might not be opposed), then the only other way to try to make heavy industry, whether nationalised or private, profitable again would be through government subsidies but this would be at the expense of other sectors of the economy.

The economic law of capitalism of ‘no profit, no production’ cannot be bucked. The government could try to go against it by protective tariffs or large subsidies but the result would be to undermine the competitiveness of British industry generally, leading to loss of jobs elsewhere in the economy. Anybody seeking to reindustrialise Britain is on a fool’s errand.

“The Manufacturers’ Association of Great Britain.” (1906)

From the June 1906 issue of the Socialist Standard

To carry on the work of organising “The Manufacturers’ Association of Great Britain,” a provisional committee has been formed, and includes such well-known manufacturers as Colonel Sir John E. Bingham, Bart. (Messrs. Walker and Hall), Sir Joseph Lawrence (Linotype and Machinery, Limited), Mr. G. Byng (General Electric Company, Limited), Mr. R. K. Morcom (Messrs. Bellis and Morcom), Mr. Hugo Hirst (Robertson Lamp Company, Limited), Mr. W. C. Mountain (Messrs. Ernest Scott and Mountain), and Mr. H. H. D. Anderson (Associated Portland Cement Manufacturers (1900), Ltd.)

A fundamental principle of the association, it is asserted, will be that party politics in every form shall be rigidly excluded. The movement is receiving the support of many of the leading manufacturing firms, and the members already enrolled are said to represent many millions of invested capital.

Cooking the Books: Global turbulence (2007)

The Cooking the Books column from the January 2007 issue of the Socialist Standard

Around 1973 the post-war boom came to an end. Various explanations were advanced. At the time one of the more popular was that profits had been squeezed because the working class had been able to take advantage of full employment to push up wages, as put forward by Andrew Glyn and Bob Sutcliffe in British Capitalism, Workers and the Profit Squeeze.

It was also the view, at the other end of the political spectrum, of Mrs Thatcher, who determined to destroy this supposed power of the unions. Which her government did after 1979. But this didn’t bring about a return to pre-1973 boom times. Which shows, argues Robert Brenner in The Economics of Global Turbulence, that it wasn’t increased wages that caused the fall in the rate of profit that precipitated what he calls “the long downturn” that is still with us.

So what did? His explanation is that the unplanned and competitive nature of capitalism led to world overproduction and overcapacity in manufacturing industry. The expansion of American manufacturing industry led the post-war boom but, in time, the same productive methods it employed were applied by its competitors in Germany and Japan, so increasing – over-increasing in fact (in relation to paying demand, not real need of course) – world manufacturing capacity.

“Normally” this would be rectified by a world slump in which the high-cost, inefficient producers would be eliminated but this didn’t happen, argues Brenner, or at least not sufficiently, because of government intervention and because some of the inefficient producers were prepared to carry on with reduced profits. And it still hasn’t happened as, although world paying demand (world trade) has expanded, world manufacturing capacity has expanded more, with the arrival, first, of Korea and Taiwan and, now, of China. As a result since 1973 the world economy as a whole has only been limping along.

The motor of capitalism has always been industry, which transforms material things into other material things. It is the renewal and expansion of such industries, and the repercussions this has on the rest of the economy, that has resulted in the accumulation of productive capital that is the essence of capitalism. But in Western countries today, with their stagnant or declining manufacturing sectors, this no longer appears to be the case. Judging by the commentaries on the financial pages, this role of motor would seem to have been taken over by “consumption”.

Capitalism has of course always satisfied paying consumer demand but this has been generated as a by-product of the accumulation of capital. Keynesianism was an attempt to go beyond this and artificially stimulate consumer demand through government spending.

Brenner argues that governments are still trying to stimulate and manipulate demand, by deliberately engineering an illusory increase in wealth by lowering short-term interest rates. This has the effect of increasing the price of stocks and shares and houses; people feel richer and, once a stock exchange or housing bubble develops, can get more money to spend through cashing in their capital gains. Brenner calls this “asset-price Keynesianism” and argues that in the end it is just as impossible to sustain as classical Keynesianism. Not only does it lead to “stop-go” as the artificially inflated demand draws in imports and creates balance of payments problems, but it also leads to stock exchange and/or housing booms and busts.

He says that the current apparent expansion in the US will sooner or later come to an end (as it now seems to be) “but, whether the reversal takes place with a whimper or a bang, economic slowdown and new turbulence still seem much more likely than a leap into a new long upturn”. So capitalism will just stagger on from mini-boom to mini-slump and back as it has done since 1973.

Editorial: The Gold Standard and the Workers. (1931)

Editorial from the October 1931 issue of the Socialist Standard

In the formation of the National Government its partisans gave such a gloomy picture of the financial condition of the country that foreign holders of English securities got the wind up and increased their selling. As so much English money is tied up in foreign investments not easily realisable (particularly in Germany), the drawing of gold from the Bank of England to meet the situation increased. This gave the industrialists their opportunity, and on Monday, September 21st, vivid placards announced that the free export of gold had been suspended. This represents a victory of the industrialist section of the capitalists over the banking section, and it is curious to notice that preparations for abandoning the gold standard had already been prepared several days before.

The comments of the Daily Herald for September 21st are fitting expressions for the mouthpiece of the industrialists. In the Editorial they make the following statement :

“Not only during the War, but for seven years after the War, we were off the gold standard, and the pound was at a discount against the dollar.

There were no disastrous consequences. We were, indeed, far more prosperous then than now. And it was in very large measure the forcing of the pound back to parity that crippled our export trade and created the heavy problem of unemployment.”

Thus does the Daily Herald help to hoodwink the workers by blaming economic troubles upon gold. The “prosperity” of the early post-war period is apparent from the following unemployment figures, 1921 to 1925 :—

The City Editor of the Daily Herald, under the heading, “More Reforms,” makes remarks that show how their real concern is for the investors :—

“Now let us turn for a moment from contemplation of the Stock Exchange as a factor in an absorbing international situation, to consider how this re-opening on Saturday will affect the ordinary British investor.

It gives him an advantage in that he can buy and sell shares on six days of the week instead of five.  (….)

It is but one reform out of many which must be accomplished before the Stock Exchange can really claim to provide an adequate service for the ordinary investor, or can take the place it should in national life as a great institution, assisting sound industrial enterprises to obtain capital and to develop along lines which will improve our trade and set to work the millions of unemployed who can find no demand for their services.”

The above “Reform” is surely a treasure, and the workers who have received wage cuts and those who will be thrown out by the economy programme agreed to by the Labour Cabinet, backed by the Herald, will know what to do with their surplus cash !

As we are preparing this issue for the press, we see that Mr. Henderson offered no opposition to the passage of the Gold Standard Bill and that there is a prospect of the Labour Party joining the National Government—possibly their hearts are aching for the lost prestige and positions,

However, to return to the Gold Standard. According to the Daily Express on Monday, September 21st,

“Nothing more heartening has happened for years.  (…) 

The fact remains that at last we are rid of the gold standard—rid of it for good and all.  (…)  

It is the end of the gold standard and the beginning of real recovery.”

The Evening Standard for the same day echoes these sentiments :—

“We are now free of the yoke of France and America. We are not tied to an illusory symbol of wealth ; we stand firmly in the fundamental strength of our position as a great trading and manufacturing nation. And we look confidently to the future.

For what does this mean ? It means a decline in imports and a corresponding boom in the great exporting trades, such as cotton and iron and steel.”

When the workers commence to pay higher prices for food with lower wages, they will not share this view. For, like other attempted solutions for economic troubles, it is a move in favour of a section of the capitalists, leaving the workers where they were before—in a condition that is steadily worsening. Taking the situation at its best, according to the advocates of abandoning the Gold Standard, the increase in exports will be offset by an increase in the prices of imports and home products, thus leaving matters where they were, but re-shuffling the positions of commercial concerns.

It will be remembered by those who read it, that the Macmillan Report on Finance and Industry recommended raising prices approximately to the 1928 level as an alternative to the lowering of wages. Mr. Bevin, a member of the Committee, agreed with this policy.

The illusion that lack of gold has anything to do with the main problems is easily dispelled. America has nearly a thousand million pounds in gold in its reserves and is the great creditor nation, Yet America has been, and still is, suffering severly from economic crises, and has an unemployed army in the neighbourhood of ten millions. France has a gold reserve of nearly five hundred millions, a regular revenue, in gold or gold marks of 50 millions from Germany, and a flourishing export trade. Yet France is already in the midst of a crisis and has an unemployed army well over a million, and the numbers are rapidly growing.

These facts prove that a gold reserve is no guarantee of internal harmony or increasing employment for workers ; and that, with or without a gold reserve, on or off the Gold Standard, the workers are, in the long run, no better off.

British Motor Car Industry (1967)

From the October 1967 issue of the Socialist Standard

Professor Buchanan once described cars as “adored” by their owners— a sharp comment on the fact that, of all the symbols of working class life in the Sixties, few are the object of such pride and care as the motor car.

Behind this rather neurotic pride, which gives the car sellers their chance, there often lies something less agreeable. Tests carried out by the Consumers’ Association regularly confirm the disappointment experienced by many owners of new cars. Here are some typical comments, from the CA magazine Which? with the price of the car: 

“persistent engine oil leaks” (£998) 

“failure of exhaust system” (£1048) 

“left wheel badly out of balance and slightly buckled” (£609) 

One British car, costing £789, had no fewer than thirty two faults on delivery three of which, said CA, were “probably serious”.

The plain fact is that, as the motor industry has developed greater combines, and as it has intensified the methods of mass production, many of its quality standards have declined in ways which cannot be compensated for by greater technical knowledge and some improved materials. Very few modern cars, for example, have the sort of chassis, bodywork or upholstery to compare with a pre-war model.

The reason is that, just like any other industry, the car firms are chasing their economic tails. They have tens of millions of pounds invested in their production lines and to get a return on this they have to see the cars streaming out of the factory. A Rootes car takes about two and a half hours to build once the basic components are gathered together; Fords of Britain makes about three thousand vehicles a day. As a rough guide, compare this to the fact that at Rolls Royce they will take between two and three months to build a car, and at Jaguar ten weeks.

The Ford Motor Company says all that needs to be said, by way of explanation of this difference:

Quality and service problems. Industry spends vast amounts in trying to cope with these, but mass production and price competition make them inevitable to some extent.” (Notes On British Motor Industry)

What sort of industry is it, which stands behind the mass-produced dream and which can so frankly confess that quality problems are inevitable? About a million men are engaged in the manufacture, sale and service of vehicles in the U.K., about 600,000 of them in manufacture. The car industry is the top British exporting industry, sending out about £750 million worth a year and is important also on the home market; more than two thirds of the national hire purchase debt is for cars.

In the main the industry consists of five big firms—British Motor Holdings (BMH); Ford; Vauxhall; Rootes; Standard Triumph. (Figure One shows the standing of these companies in the British market.) This Big Five account for almost the entire British production of cars ; up to just over a year ago the independent Rover and Jaguar were responsible for almost three per cent of sales but now both these firms have joined one of the big combines. Mergers are now an established part of the industry ; the big firms often take over one or other of their suppliers, or of their rivals, heaping one merger upon another into a massive and intricate combine. (Figure Two shows something of the set-up at B.M.H.)

The car industry’s work is in some part a matter of assembling components which have been produced outside, some by big concerns (electrical equipment by Lucas, propellor shafts by Hardy-Spicer) and some by small family firms (leather by Connolly Bros., cylinder head studs by M.V. Engineering). The economics of mass production force the car firms to store the very minimum of components; B.M.H. at Longbridge hold at most a day’s stock of major production items, Rootes enough trimmed and painted bodies for only one shift. This makes the industry heavily reliant on the dependability of its suppliers—and exceedingly vulnerable to labour disputes.

Strikes are another of the car firms’ big problems. Persistent labour trouble at Ford’s have caused two official inquiries into staff relations there—by Lord Cameron in 1957 and by Mr. D. T. Jack in 1963. Both investigations went over the same ground but neither did the impossible ; neither produced a solution to the problems it was investigating.

But one thing the inquiries did make clear and that was the government’s concern at the importance of the car industry to the economy of British capitalism. When Dagenham sneezes, it is said, the British economy will catch a cold. At the moment Dagenham, and all the other car towns, are exhibiting the symptoms of a prolonged sickness.

In 1966, Vauxhall’s pre-tax profits were £3,666,898—compared to £17,735,372 the year before. In the same period, Ford’s profits before tax fell from £8.9 million to £7.4 million. Most spectacular of them all B.M.H., whose accounting year is timed so that they reported on the full effects of the 1966 car slump, announced a loss of £7.52 million during the first six months of their financial year compared to a pre-tax profit of £5.785 million in the first half of the previous year.

There is an abundance of ominous figures to record the current slump in cars: new car registrations up to July 103,000 down on last year’s; production running about ten per cent lower than in 1966, when sales were in any case 87,000 lower than in 1965. Over the past couple of months sales have picked up but the car makers are not rejoicing; they may be in for their worst winter for over twenty years.

The motor industry has had many such ups and downs (see Figure Three). What is worrying the car firms now is the abundant evidence that they are in for a long period of decline and that any further pressure on their profits will force them to cut down on the capital investment which is so important to their competitive existence. Typical of their comments amid the gloom are:

Success in the motor industry demands a sustained and high level of investment and a vigilant control of costs. Without adequate returns, neither is possible. (Ford’s).

… it is imperative that the Government should take the very first opportunity of permitting our industry to find its natural level, thus allowing it to stabilise production and generate the capital so urgently needed to keep abreast of its foreign competitors. (B.M.H.)

The government’s remedy for this situation has been the by-now classical one of easing hire purchase controls; in June they cut the minimum deposit on H.P. car sales from 40 to 30 per cent and increased the maximum repayment period from 24 to 30 months. In August there was another relaxation; deposit down to 25 per cent, repayment period up to 36 months. The car makers gave a cautious welcome to these measures, although their own suggestions are no more fundamental.

It is instructive now to remember the forecast made in Ford’s 1959 Report, which came out a couple of years before the car industry hit a slump, that the next ten years would be a “decade of opportunity for the motor industry”. Such optimism is common in all capitalism’s industries; only occasionally does one of their spokesmen put his finger on the essential problem, and reveal how hopeless all their remedies are. In the Sunday Times of May 14 last Henry Ford II said it: “We have not yet discovered the secret of making anybody buy our products”.

Ivan

Extracts from ‘‘Packaging News”, May 1977 (1977)

From the August 1977 issue of the Socialist Standard

“BIG FOUR” SAY 1976 WAS A GOOD YEAR FOR PROFITS

“Another record year for profits was recorded in 1976 by Rockware Group Ltd. . . .  On a turnover increased by about one-third, operating profit was up from £46,000 to £302,000.

And engineering also produced good results with operating profits rising from £72,000 to £146,000.

“An interim board forecast that 1976-77 would be the best year in the history of Jefferson Smurfit Group has now been confirmed by results.

The second half year finished with pre-tax profits of £6 million against £4.6 million for the first half. Taking the year as a whole, group profits before tax are £10.6 million, 77 per cent ahead of last year.

“Advances of 43 per cent in sales and 63 per cent in pre-tax profits compared with 1975 enabled results at TPT Ltd. last year to surpass the previous best.

“A ‘remarkable’ growth of almost 30 per cent from £8,500,000 to £10,947,000 in home sales last year has been reported by Beatson Clark & co. Ltd.

Profit before tax was £1,776,000 compared with £1,072,000 in 1975.

★ ★ ★

Mentioned in small type on the same page under “Finance in Brief”, the following: “An increase in profits from £5.5 million in 1975 to £9 million was recorded for its packaging business last year by Bowater Corporation Ltd.”

Cooking the Books: Passing on costs (2008)

The Cooking the Books column from the July 2008 issue of the Socialist Standard

On May the index of the factory gate price of manufactured goods rose by 1.6 percent. As this was the biggest monthly rise since March 1981, the media began to talk of “a summer of inflation” (Times, 10 June). Since they mistakenly regard any price rise, however caused, as inflation what they meant was that a spate of price rises could be expected this summer which will affect not just those who buy producer goods but the rest of us too who buy consumer goods.

The manufacturers are arguing that they have to increase their prices because their costs have risen. It is true that their costs, particularly energy, have risen but manufacturers cannot increase their prices just because they have to pay more for their raw materials or energy (or, for that matter, wages). Prices are not determined by what the manufacturers would like but by what the market for their product will bear.

All firms aim to make as much profit as possible but will be satisfied if they can cover their costs and make the going rate of profit. This is the normal situation and is brought about by competition. If a firm tries to make a bigger profit by increasing its price above cost plus normal profit it won’t succeed. Its product won’t sell as those who use it will turn to other, cheaper suppliers.

This does not mean that they can never raise prices, or rather that the market will never allow them to do so. It is official government policy to inflate the currency so that the general price level rises at around 2 percent a year. So, other things being equal, firms can safely increase their price by this amount. As everybody will be doing it, it is something the market can bear.

Sometimes, due to an unexpected fall or interruption of supply, suppliers can increase their price to take advantage of this. This is the operation of the law of supply and demand: there are more paying demanders than suppliers so the price goes up. But this will only be temporary. Supplies will eventually be restored, even if by new suppliers being attracted by the higher profits, and prices (and profits) will fall again.

So, cost increases do not automatically lead to price increases (and this applies to wage increases as well as to other costs). This will only happen if the market will bear it. If the market won’t then the capitalist firm, whether manufacturing or retailing, cannot pass the increased cost on to consumers. They have to “absorb” it, as reduced profits.

The figures for factory gate prices from the Office for National Statistics illustrate this well. They show that the index of “input prices” (i.e. costs) of manufactured goods has been rising faster than that for “output prices”. While the index for these latter rose by 1.6 percent in May that for input prices rose by 3.8 percent. In the year ending May 2008 the index of input prices rose by a record 27.9 percent but the index for output prices rose by only 8.9 percent. (www.statistics.gov.uk/pdfdir/ppibrief0608.pdf)

Clearly, to maintain their profits, manufacturers would have liked to raise the price at which they sold their products as fast as their costs. The fact that they didn’t is sufficient proof that they couldn’t. But there are limits to how far their profits can be squeezed. As Gary Duncan, economics editor of the Times pointed out:

“The double whammy of stalled spending by struggling households alongside rising costs for every kind of business means that companies’ sales and profits are going to be under growing strain. This will spell cutbacks and layoffs. This raises the spectre that the economy could slide into a vicious downward spiral”.

Exploitation goes up (1993)

From the June 1993 issue of the Socialist Standard

Everybody has heard of VAT—Value Added Tax. It is ironic that the tax authorities should have recourse to a concept—"value added"—that sounds as if it might have come from Marxian economics. But when you deal with the real world, as the tax authorities do in a way that academic economists don't, you do have to take account of facts such as new value being added to the previously existing value of materials by labour in the course of production.

Value-added, as used by the tax authorities and also by those who compile the National Income statistics, is the difference between the monetary value of the materials and services a firm buys and the monetary value of the output it sells. The Penguin Dictionary of Economics defines it as follows:

The difference between total revenue of a firm, and the cost of bought-in raw materials, services and components. It thus measures the value which the firm has “added" to these bought-in materials and components by its processes of production. Since the total revenue of the firm will be divided among capital charges (including depreciation), rent, dividend payments, wages and the costs of materials, services and components, value added can also be calculated by summing the relevant types of cost and subtracting that total from total revenue.

In other words, value-added is the monetary value of the new wealth produced in a firm, which is divided into the property income of the firm’s owners (profits and the various charges upon it such as rent, interest and taxes) and the wages and salaries of the firm’s employees whose labour produced that new wealth. (Strictly speaking, depreciation, which is a measure of the fixed capital used up in the process of production, should be excluded but as this can't be calculated so easily and so quickly as the other costs this is not always done; value-added including depreciation is known as “gross value added".)

Unpaid labour

This division of value-added into property income and labour income provides a way to measure the exploitation of the workers in a particular firm or industry. This can be expressed in a number of different ways: as the percentage share of wages and salaries (or of profits) in value-added; as the ratio between the amount of profits and the amount of wages and salaries (roughly the equivalent of Marx’s “rate of exploitation"); as the amount of working time spent producing profits (unpaid labour time); and. if the number of workers are known, as the amount of profit per worker.

The Annual Abstract Statistics, published in January each year by the Central Statistical Office, very obligingly provides a set of statistics (Table 8.1) which allows us to calculate what these all are and so the extent of the exploitation of workers in various sectors of industry.

The 1993 edition gives the latest figures, those for 1990, relating to “manufacturing", which covers most of the sectors of the economy where wealth is actually produced. In 1990 the “gross value added" (output) in this sector was £111,051m; the total paid out as wages and salaries was £59,712m; the average number of employees was 4,840,000. This, the Table records, gives a figure for “gross value added per person employed” of £22,945.

The Table stops here but we can use the figures to calculate the extent of exploitation. A figure for profits can be got by deducting “wages and salaries" from “gross value added", which gives £51,339m, so a profit (what might be called “surplus-value added") of £10,607 per worker. The share of wages and salaries in gross value added, as the workers' share in the product of their labour, was 53.8 percent. This meant that in every hour they worked 32 minutes to reproduce the value of their wages and 28 minutes working unpaid to produce profits for their employers. The ratio of profits to wages was 86.0 percent.

More for profits

The Table, together that in previous editions, gives figures going back to 1981 and, once these have been converted into 1990 prices (so as to be comparable), it is possible to see what happened over the ten-year period 1981-90.

Between 1981 and 1990 output (“gross value added") increased in real terms from £97.704m to £111,051m, an increase of £13,347m, or 13.7 percent. Of this increase, £2,051m (15 percent) went to the workers as wages and salaries and £11,296m (85 percent) to the owners as profits. Over the same period the average number of workers fell from 5,778,000 to 4,840,000.

It is clear at a glance that this must mean that exploitation increased, even though the workers’ real wages also went up. A detailed analysis confirms this. Output per worker increased from £16,910 in 1981 to £22,945 in 1990 (36 percent); wages per worker, however, went up by much less, 24 percent, from £9,980 to £12,337, the balance going to profits. So all the measures of the rate of exploitation went up. Profit per worker increased from £6,930 to £10,608; the ratio of profits to wages went up from 69.4 percent to 86.0 percent; and the workers’ share in their product fell from 59.0 percent to 53.8 percent.

1990, it should be noted, as the year the current slump broke out, was not the best year for profits and, as the following table shows, exploitation increased steadily with the recovery from the previous slump in 1982. reaching a peak in 1988.

In any event, what the official government figures confirm is what the workers involved will have known already from personal experience: that in the 1980s the reduced workforce was forced to work harder to produce both more output and bigger profits for their employers. In concrete terms, at the end of the period the employers were extracting an extra £3,677 in profit from each worker left and, for a 40-hour week, had increased the period of unpaid labour time by 2 hours and 5 minutes.

Adam Buick

The Prawn Cocktail Party (1998)

Book Review from the July 1998 issue of the Socialist Standard

Prawn Cocktail Party by Robin Ramsay. Vision. £9.99

The Prawn Cocktail Party is of course the Labour Party which when in opposition under John Smith and then Tony Blair organised a series of lunches and receptions in order to convince business and the City that they had nothing to fear from a Labour government. According to Ramsay, the City welcomed this as they had already begun to write off, for the time being at least, the Tory Party as a reliable instrument of their political will because of the large inward-looking Eurosceptic element within it.

Ramsay starts from the premise that “there are essentially two economies in the UK. One is the domestic, manufacturing economy and its allied services; the other consists of the City of London, its support services in the ring of shires round the capital, and some multinationals with bases and plant in the UK. Traditionally, he says (and he writes as a Labour Party member), Labour has defended manufacturing industry while the Tories have represented the City. But now:

“British politics has been stood on its head. The Conservative Party, traditionally the party of financial and overseas interests, has been replaced in that role by Labour. Instructed by its new friends in the City, Labour has become the party of financial, pre-Keynesian orthodoxy. Gordon Brown looks determined to re-enact the role of Philip Snowden in 1931—the perfect Labour Party front man for the interests of the overseas lobby”.

This explains, says Ramsay, why one of the first acts of the Labour government last year was to give the Bank of England the freedom to fix interest rates and why Gordon Brown and other Labour ministers defend the policy of allowing the pound to rise in value even though this harms exporting industries. Instead of defending the interest of manufacturing industry as it used to, Labour is now promoting the interests of the City.

To Ramsay the City is the villain of the piece. Certainly they are villainous enough, but he exaggerates when he describes a policy of high interest rates as a “racket” and a “fraud” on the grounds that banks make more profits when interest rates are high than when they are low. If, like Ramsay, you think that banks have the power to create credit out of nothing this would be true. In fact, however, banks are financial intermediaries which make their profits from lending money out at a higher rate than they pay those they borrow it from. This means that what is important for their profits is not the absolute level of interest rates but the difference between the rate charged to borrowers and the rate paid to lenders; if interest rates are high banks don’t necessarily make bigger profits since they have to pay higher rates to their depositors—in fact high bank profits are not at all incompatible with low interest rates.

So there is no basis for Ramsay’s supposition that the banks are somehow worse than manufacturing businesses and that we should therefore support the latter against the former. Since both derive their profits from the surplus value produced by the workers and since it is the capitalist system as a whole that is the cause of our problems, why should we support the manufacturing capitalists against the financial capitalists?

Adam Buick

Marx on Free Trade. (1926)

From the February 1926 issue of the Socialist Standard

(Continued from previous issues)

Mr. Bowring’s speech is the more remarkable because the facts quoted by him are correct, and the phrases with which he seeks to palliate them are characterized by the hypocrisy common to all Free Trade discourses. He represents the workers as means of production which must be.superseded by less expensive means of production, pretends to see in the labour of which he speaks a wholly exceptional kind of labour, and in the machine which has crushed out the weavers an equally exceptional kind of machine. He forgets that there is no kind of manual labour which may not any day share the fate of the hand-loom weavers.

“The constant aim and tendency of every improvement of mechanism is indeed to do entirely without the labour of men, or to reduce its price, by superseding the labour of the adult males by that of women and children, or the work of the skilled by that of the unskilled workman. In most of the throstle mills, spinning is now entirely done by girls of sixteen years and less. The introduction of the self-acting mule has caused the discharge of most of the (adult male) spinners, while the children and young persons have been kept on.”

The above words of the most enthusiastic of Free Traders, Dr. Ure, are calculated to complete the confessions of Dr. Bowring. Mr. Bowring speaks of certain individual evils, and, at the same time, says that these individual evils destroy whole classes; he speaks of the temporary sufferings during a transition period, and does not deny that these temporary evils have implied for the majority the transition from life to death, and for the rest a transition from a better to a worse condition. When he asserts, farther on, that the sufferings of the working class are inseparable from the progress of industry, and are necessary to the prosperity of the nation, he simply says that the prosperity of the bourgeois class presupposes as necessary the suffering of the labouring class.

All the comfort which Mr. Bowring offers the workers who perish, and, indeed, the whole doctrine of compensation which the Free Traders propound, amounts to this—

You thousands of workers who are perishing, do not despair ! You can die with an easy conscience. Your class will not perish. It will always be numerous enough for the capitalist class to decimate it without fear of annihilating it. Besides, how could capital be usefully applied if it did not take care to keep up its exploitable material, i.e., the workingmen, to be exploited over and over again?

But, then, why propound as a problem still to be solved the question: What influence will the adoption of the Free Trade have on the condition of the working class? All the laws formulated by the political economists from Quesnay to Ricardo, have been based upon the hypothesis that the trammels which still interfere with commercial freedom have disappeared. These laws are confirmed in proportion as Free Trade is adopted. The first of these laws is that competition reduces the price of every commodity to the minimum cost of production. Thus the minimum of wages is the natural price of labour. And what is the minimum of wages? Just so much as is required for production of the articles absolutely necessary for the maintenance of the worker, for the continuation, by hook or by crook, of his own existence and that of his class.

But do not imagine that the worker receives only this minimum wage, and still less that he always receives it. No, according to this law, the working class will sometimes be more fortunate, will sometimes receive something above the minimum, but this surplus will merely make up for the deficit which they will have received below the minimum in times of industrial depression. That is to say that within a given time which recurs periodically, in other words, in the cycle which commerce and industry describe while passing through the successive phases of prosperity, overproduction, stagnation, and crisis, when reckoning all that the working class has had above and below mere necessaries, we shall see that, after all, they have received neither more nor less than the minimum; i.e., the working class will have maintained itself as a class after enduring any amount of misery and misfortune, and after leaving many corpses upon the industrial battle-field.

(To be continued)

Cooking the Books: From Workshop to Counting House (2005)

The Cooking the Books column from the June 2005 issue of the Socialist Standard

The demise of Rover – the much-lauded competition that is built-in to capitalism means there are losers as well as winners – has revived the debate about the decline of manufacturing industry in Britain. Matthew Parris, the former Tory MP turned journalist, recalled a debate he had last year with fellow Times columnist Anatole Kaletsky: “I asked whether it really was true that  trade balance didn’t matter, and manufacturing things didn’t matter, any more. Anatole argued that where in the world an item is manufactured is unimportant as long as we get the profits. I think Anatole won that debate” (Times, 9 April).

The “we” in question of course is not the wage and salary working class living and working in Britain but the British capitalist class. And, from their point of view, Kaletsky was right: all a particular group of capitalists need be interested is the amount of profits they can rake in. But it is still true that without manufacturing – somewhere in the world – there would be no profits to rake in. The original source of all profits is the surplus value produced in that section of the economy that changes the form of material things, and which includes, besides manufacturing proper, agriculture, mining, building and transportation .

Capital invested in other activities such as banking, insurance, buying and selling, advertising, consultancy and the like, which do not produce anything (despite them calling themselves an “industry”), gets a share of the surplus value produced in the productive sector. Basically, rather than productive capitalists investing a part of their capital in financing these activities essential to capitalism as they would otherwise have to, a situation has evolved whereby these activities have been hived off, as it were, to separate capitalists who specialise in them.

The price the productive capitalists have to pay for not having to be their own bankers, insurers, sellers, advertisers, etc is that they have to share some of their surplus value with the capitalists with money invested in these activities. This comes about, as Marx explained in the first part of Volume III of Capital, more or less automatically through competition amongst capitals to obtain the best rate of profit resulting in all capitals tending to receive the same rate irrespective of whether the activity in question is directly productive of surplus value or not.

This is the sense in which Kaletsky is right when he said that “where in the world an item is manufactured is unimportant as long as we get the profits”. The dominant section of the British capitalist class and its stewards, the government of the day, has decided to go along with the economic trend for the manufacture of certain goods to be transferred, because of lower production costs, to Asia or South America, and to get its share of the surplus value produced there by concentrating on providing services at world level that are essential to capitalism but intrinsically non-productive, mainly in the fields of banking and consultancy. It’s a sign that we are already living in one world from an economic point of view.

The decline of manufacturing in Britain means a change in the composition of the working class here but it does not mean that those working in the non-productive sector of the economy are not exploited. They are, to the extent that they are paid less than the share of world surplus value their work procures for their employers.

Marx on Free Trade. (1924)

From the August 1924 issue of the Socialist Standard

(Continued from June “S.S.”)

In 1829 there were, in Manchester, 1088 cotton spinners employed in 36 factories. In 1841 there were but 448, and they tended 53,353 more spindles than the 1088 spinners did in 1829. If manual labour had increased in the same proportion as productive force, the number of spinners ought to have risen to 1848; improved machinery had, therefore, deprived 1100 workers of employment.

We know beforehand the reply of the economists—the people thus thrown out of work will find other kinds of employment. Dr. Bowring did not fail to reproduce this argument at the Congress of Economists. But neither did he fail to contradict himself. In 1833, Dr. Bowring made a speech in the House of Commons upon the 50,000 hand-loom weavers of London who had been starving without being able to find that new kind of employment which the free traders hold out to them in the distance. Let us hear the most striking portion of this speech of Mr. Bowring :—

  “The misery of the hand-loom weavers,” he says, “is the inevitable fate of all kinds of labour which are easily acquired, and which may, at any moment, be replaced by less costly means. As in these cases competition amongst the work-people is very great, the slightest falling-off in demand brings on a crisis. The hand-loom weavers are, in a certain sense, placed on the borders of human existence. One step further, and that existence becomes impossible. The slightest shock is sufficient to throw them on to the road to ruin. By more and more superseding manual labour, the progress of mechanical science must bring on, during the period of transition, a deal of temporary suffering. National well-being cannot be bought except at the price of some individual evils. The advance of industry is achieved at the expense of those who lag behind, and of all discoveries that of the power-loom weighs most heavily upon the hand-loom weavers. In a great many articles formerly made by hand, the weaver has been placed hors de combat; and he is sure to be beaten in a good many more fabrics that are now made by hand.”

Further on he says:—

  “I hold in my hand a correspondence of the Governor-General with the East India Company. This correspondence is concerning the weavers of the Dacca district. The governor says in his letter: ‘A few years ago the East India Company received from six to eight million pieces of calico woven upon the looms of the country. The demand fell off gradually and was reduced to about a million pieces. At this moment it has almost entirely ceased. Moreover, in 1800, North America received from India nearly 800,000 pieces of cotton goods. In 1830 it did not take even 4000. Finally, in 1800 a million of pieces were shipped for Portugal; in 1830 Portugal did not receive above 20,000.’

  “The reports on the distress of the Indian weavers are terrible. And what is the origin of that distress? The presence on the market of English manufactures, the production of the same article by means of the power-loom. A great number of the weavers died of starvation; the remainder have gone over to other employment, and chiefly to field labour. Not to be able to change employment amounted to a sentence of death. And at this moment the Dacca district is crammed with English yarns and calicoes. The Dacca muslin, renowned all over the world for its beauty and firm texture, has also been eclipsed by the competition of English machinery. In the whole history of commerce, it would, perhaps, be difficult to find suffering equal to what these whole classes in India had to submit to.”

(To be continued)

Marx on Free Trade. (1924)

From the June 1924 issue of the Socialist Standard

(Continued from May “S.S.”)

Do not believe, gentlemen, that it is a matter of indifference to the working man whether he receives only four francs on account of corn being cheaper, when he had been receiving five francs before.

Have not his wages always fallen in comparison with profit ? And is it not clear that his social position has grown worse as compared with that of the capitalist ? Beside which he loses actually. So long as the price of corn was higher and wages were also higher, a small saving in the consumption of bread sufficed to procure him other enjoyments. But as soon as bread is cheap, and wages are therefore low, he can save almost nothing on bread for the purchase of other articles.

The English working men have shown the English Free Traders that they are not the dupes of their illusions or of their lies; and if, in spite of this, the workers have made common cause with the manufacturers against the landlords, it is for the purpose of destroying the last remnant of feudalism, that henceforth they may have only one enemy to deal with. The workers have not miscalculated, for the landlords, in order to revenge themselves upon the manufacturers, have made common cause with the workers to carry the Ten Hours Bill, which the latter had been vainly demanding for thirty years, and which was passed immediately after the repeal of the Corn Laws.

When Dr. Bowring, at the Congress of Economists, drew from his pocket a long list to show how many head of cattle, how much ham, bacon, poultry, etc., is imported into England, to be consumed — as he asserted — by the workers, he forgot to state that at the same time the workers of Manchester and other factory towns were thrown out of work by the beginning of the crisis.

As a matter of principal in political economy, the figures of a single year must never be taken as the basis for formulating general laws. We must always take the average of from six to seven years, a period during which modern industry passes through the successive phases of prosperity, overproduction, crisis, thus completing the inevitable cycle.

Doubtless, if the price of all commodities falls — and this is the necessary consequence of Free Trade — I can buy far more for a franc than before. And the working man’s franc is as good as any other man’s. Therefore Free Trade must be advantageous to the working man. There is only one little difficulty in this, namely that the workman, before he exchanges his franc for other commodities, has first exchanged his labour for the money of the capitalist. If in this exchange he always received the said franc while the price of all other commodities fell, he would always be the gainer by such a bargain. The difficulty does not lie in proving that the price of all commodities falling more commodities can be bought for the same sum of money.

Economists always take the price of labour at the moment of its exchange with other commodities, and altogether ignore the moment at which labour accomplishes its own exchange with capital. When it costs less to set in motion the machinery which produces commodities, then the things necessary for the maintenance of this machine, called workman, will also cost less. If all commodities are cheaper, labour, which is a commodity too, will also fall in price, and we shall see later that this commodity, labour, will fall far lower in proportion than all other commodities. If the working man still pins his faith to the arguments of the economists, he will find, one fine morning, that the franc has dwindled in his pocket, and that he has only five sous left.

Thereupon the economists will tell you :–

  “We admit that competition among the workers will certainly not be lessened under Free Trade, and will very soon bring wages into harmony with the low price of commodities. But, on the other hand, the low price of commodities will increase consumption, the larger consumption will increase production, which will in turn necessitate a larger demand for labour, and this larger demand will be followed by a rise in wages.

  

   “The whole line of argument amounts to this : Free Trade increases productive forces. When manufactures keep advancing, when wealth, when the productive forces, when, in a word, productive capital increases, the demand for labour, the price of labour, and consequently the rate of wages, rises also.”

The most favourable condition for the working man is the growth of capital. This must be admitted : when capital remains stationary, commerce and manufacture are not merely stationary but decline, and in this case the workman is the first victim. He goes to the wall before the capitalist. And in the case of the growth of capital, under the circumstances, which, as we have said, are the best for the working man, what will be his lot? He will go to the wall just the same. The growth of capital implies the accumulation and the concentration of capital. This centralization involves a greater division of labour and a greater use of machinery. The greater division of labour destroys the especial skill of the labourer; and by putting in the place of this skilled work labour which any one can perform, it increases competition among the workers.

This competition becomes more fierce as the division of labour enables a single man to do the work of three. Machinery accomplishes the same result on a much larger scale. The accumulation of productive capital forces the industrial capitalist to work with constantly increasing means of production, ruins the small manufacturer, and drives him into the proletariat. Then, the rate of interest falling in proportion as capital accumulates, the people of small means and retired tradespeople, who can no longer live upon their small incomes, are forced to look out for some business again and ultimately to swell the number of proletarians. Finally, the more productive capital grows, the more it is compelled to produce for a market whose requirements it does not know—the more supply tries to force demand, and consequently crises increase in frequency and in intensity. But every crisis in turn hastens the concentration of capital, adds to the proletariat. Thus, as productive capital grows, competition among the workers grows too, and grows in a far greater proportion. The reward of labour is less for all, and the burden of labour is increased for at least some of them.

To be continued

Marx on Free Trade. (1924)

From the May 1924 issue of the Socialist Standard

A speech delivered before the Democratic Association of Brussels, at its public meeting, January 9th, 1848.

Reprinted from “The Poverty of Philosophy.” (Twentieth Century Press, Ltd., London, 1900).

Gentlemen: – The Repeal of the Corn Laws in England is the greatest triumph of Free Trade in the nineteenth century. In every country where manufacturers discuss Free Trade, they have in mind chiefly Free Trade in corn or raw material generally. To burden foreign corn with protective duties is infamous, it is to speculate on the hunger of the people.

Cheap food, high wages, for this alone the English Free Traders have spent millions, and their enthusiasm has already infected their continental brethren. And, generally speaking, all those who advocate Free Trade do so in the interests of the working class.

But, strange to say, the people for whom cheap food is to be procured at all costs are very ungrateful. Cheap food is as ill reputed in England as is cheap government in France. The people see in these self-sacrificing gentlemen, in Bowring, Bright & Co., their worst enemies and the most shameless hypocrites.

Everyone knows that in England the struggle between Liberals and Democrats takes the name of the struggle between Free Traders and Chartists. Let us see how the English Free Traders have proved to the people the good intentions that animate them.

This is what they said to the factory hands : –

  “The duty on corn is a tax upon wages ; this tax you pay to the landlords, those medieval aristocrats ; if your position is a wretched one, it is only on account of the high price of the most indispensable articles of food.”

The workers in turn asked of the manufacturers : –

  “How is it that in the course of the last thirty years, while our commerce and manufacture has immensely increased, our wages have fallen far more rapidly, in proportion, than the price of corn has gone up ?

  “The tax which you say we pay the landlords is about three pence a week per worker. And yet the wages of the hand-loom weaver fell, between 1815 and 1843, from 28s. per week to 5s., and the wages of the power-loom weavers, between 1823 and 1843, from 20s. per week to 8s. And during the whole of the time that portion of the tax which you say we pay the landlord has never exceeded three pence. And, then, in the year 1834, when bread was very cheap and business lively, what did you tell us ? You said, ‘If you are poor, it is only because you have too many children, and your marriages are more productive than your labor !’

  “These are the very words you spoke to us, and you set about making new Poor Laws, and building work houses, those Bastilles of the proletariat.”

To this the manufacturers replied : –

   “You are right, worthy labourers ; it is not the price of corn alone, but competition of the hands among themselves as well, which determines wages.

   “But just bear in mind the circumstance that our soil consists of rocks and sandbanks only. You surely do not imagine that corn can be grown in flowerpots ! If, instead of wasting our labour and capital upon a thoroughly sterile soil, we were to give up agriculture, and devote ourselves exclusively to commerce and manufacture, all Europe would abandon its factories, and England would form one huge factory town, with the whole of the rest of Europe for its agricultural districts.”

While thus haranguing his own working men, the manufacturer is interrogated by the small tradesınen, who exclaim : –

  “If we repeal the Corn Laws, we shall indeed ruin agriculture ; but, for all that, we shall not compel other nations to give up their own factories, and buy our goods. What will the consequences be ? I lose my customers in the country, and the home market is destroyed.”

The manufacturer turns his back upon the working men and replies to the shopkeeper : –

   “As to that, you leave it to us ! Once rid of the duty on corn, we shall import cheaper corn from abroad. Then we shall reduce wages at the very time when they are rising in the countries where we get our corn. Thus in addition to the advantages which we already enjoy we shall have lower wages and, with all these advantages, we shall easily force the Continent to buy of us.”

But now the farmers and agricultural labourers join in the discussion.

  “And what, pray, is to become of us ? Are we to help in passing a sentence of death upon agriculture, when we get our living by it ? Are we to let the soil be torn from beneath our feet?”

For all answer the Anti-Corn Law League contented itself with offering prizes for the three best essays upon the wholesome influence of the repeal of the Corn Laws on English agriculture.

These prizes were carried off by Messrs. Hope, Morse and Greg, whose essays were distributed broadcast throughout the agricultural districts. One of the prize essayists devotes himself to proving that neither the tenant farmer nor the agricultural labourer would lose by the repeal of the Corn Laws, and that the landlord alone would lose.

  “The English tenant farmer,” he exclaims, “need not fear repeal, because no other country can produce such good corn so cheaply as England. Thus, even if the price of corn fell, it would not hurt you, because this fall would only affect rent, which would go down, while the profit of capital and the wages of labour would remain stationary.”

The second prize essayist, Mr. Morse, maintains, on the contrary, that the price of corn will rise in consequence of repeal. He is at infinite pains to prove that protective duties have never been able to secure a remunerative price for corn.

In support of his assertion he quotes the fact that, wherever foreign corn has been imported, the price of corn in England has gone up considerably, and that when no corn has been imported the price has fallen extremely. This prize-winner forgets that the importation was not the cause of the high price, but that the high price was the cause of the importation. In direct contradiction of his colleague he asserts that every rise in the price of corn is profitable to both the tenant farmer and labourer, but does not benefit the landlord.

The third prize essayist, Mr. Greg, who is a large manufacturer and whose work is addressed to the large tenant farmers, could not afford to echo such silly stuff. His language is more scientific. He admits that the Corn Laws can increase rent only by increasing the price of corn, and that they can raise the price of corn only by inducing the investment of capital upon land of inferior quality, and this is explained quite simply.

In proportion as population increases, it inevitably follows, if foreign corn cannot be imported, that less fruitful soil must be placed under cultivation. This involves more expense and the product of this soil is consequently dearer. There being a demand for all the corn thus produced, it will all be sold. The price for all of it will of necessity be determined by the price of the product of the inferior soil. The difference between this price and the cost of production upon soil of better quality constitutes the rent paid for the use of the better soil.

If, therefore, in consequence of the repeal of the Corn Laws, the price of corn falls, and if, as a matter of course, rent falls along with it, it is because inferior soil will no longer be cultivated. Thus the reduction of rent must inevitably ruin a part of the tenant farmers.

These remarks were necessary in order to make Mr. Greg’s language comprehensible.

  “The small farmers,” he says, “who cannot support themselves by agriculture must take refuge in manufacture. As to the large tenant farmers, they cannot fail to profit by the arrangement : either the landlord will be obliged to sell them land very cheap, or leases will be made out for very long periods. This will enable tenant farmers to invest more capital in their farms, to use agricultural machinery on a larger scale, and to save manual labour, which will, moreover, be cheaper, on account of the general fall in wages, the immediate consequence of the repeal of the Corn Laws.”

Dr. Bowring conferred upon all these arguments the consecration of religion, by exclaiming at a public meeting, “Jesus Christ is Free Trade, and Free Trade is Jesus Christ.”

It may be easily understood that all this cant was not calculated to make cheap bread attractive to working men.

Besides, how should the working men understand the sudden philanthropy of the manufacturers, the very men still busy fighting against the Ten Hours Bill, which was to reduce the working day of the mill hands from twelve hours to ten ?

To give you an idea of the philanthropy of these manufacturers I would remind you of the factory regulations in force in all their mills.

Every manufacturer has for his own private use a regular penal code by means of which fines are inflicted for every voluntary or involuntary offence. For instance, the hand pays so much when he has the misfortune to sit down on a chair, or whisper, or speak, or laugh ; if he is a few moments late ; if any part of a machine breaks, or he turns out work of an inferior quality, &c. The fines are always greater than the damage really done by the workman. And to give the workman every opportunity for incurring fines the factory clock is set forward, and he is given bad material to make into good stuff. An overseer unskilful in multiplying infractions of rules is soon discharged.

You see, gentlemen, this private legislation is enacted for the especial purpose of creating such infractions, and infractions are manufactured for the purpose of making money. Thus the manufacturer uses every means of reducing the nominal wage, and even profiting by accidents over which the workers have no control.

And these manufacturers are the same philanthropists who have tried to persuade the workers that they were capable of going to immense expense for the sole and express purpose of improving the condition of these same working men ! On the one hand they nibble at the workers’ wages in the pettiest way, by means of factory regulations, and, on the other, they are prepared to make the greatest sacrifices to raise those wages by means of the Anti-Corn Law League.

They build great palaces, at immense expense, in which the League takes up its official residence. They send an army of missionaries to all corners of England to preach the gospel of Free Trade ; they print and distribute gratis thousands of pamphlets to enlighten the working man upon his own interests. They spend enormous sums to buy over the press to their side. They organise a vast administrative system for the conduct of the Free Trade movement, and bestow all the wealth of their eloquence upon public meetings. It was at one of these meetings that a working man cried out : –

  “If the landlords were to sell our bones, you manufacturers would be the first to buy them, and to put them through the mill and make flour of them.”

The English working men have appreciated to the fullest extent the significance of the struggle between the lords of the land and of capital. They know very well that the price of bread was to be reduced in order to reduce wages, and that the profit of capital would rise by as much as rent fell.

Ricardo, the apostle of the English Free Traders, the leading economist of our century, entirely agrees with the workers upon this point. 

In his celebrated work upon political economy he says : –

  “If instead of growing our own corn… we discover a new market from which we can supply ourselves… at a cheaper price, wages will fall and profits rise. The fall in the price of agricultural produce reduces the wages, not only of the labourer employed in cultivating the soil, but also of all those employed in commerce or manufacture.”

(To be continued)