Editorial: The Labour Party’s Thirty-One Years. (1931)

Editorial from the March 1931 issue of the Socialist Standard

Workers Worse Off

The Labour Party was formally constituted under its present title in February, 1906, after the General Election at which twenty-nine Labour M.P.’s were returned. Six years earlier the Labour Party’s predecessor, the Labour Representation Committee, was formed. The Independent Labour Party, which was largely instrumental in bringing about the later developments, was formed in 1893—nearly forty years ago.

All three bodies were based on the same general set of ideas. They rejected the possibility of winning over the workers to Socialism by the direct method of preaching clear-cut Socialist principles, and based their hopes on the policy of winning support by the indirect method of social reforms. They argued, not without some show of reason, that the workers were interested in day-to-day issues containing the promise of immediate advantage, and were not interested in the broad question of the organisation of society. Those who retorted that the job must be tackled of changing the workers’ outlook were pushed aside. They were told that practical work would prove far more effective than mere criticism of capitalism and preaching of Socialism. The Socialist Party of Great Britain was a voice crying in the wilderness. Our warning that capitalism would frustrate all the practical work as fast or faster than it could be achieved, and still leave Socialism unattained, was ignored or derided. Now that thirty-one years have passed and the Labour Party has twice been in office, it is opportune to look back and judge of the truth of our criticism. How have the facts treated the Labour Party’s theory?

Are the workers better off? Have they improved their position relatively to that of the capitalist class? Is life more leisurely for them and more secure? Have extremes of wealth and poverty been abolished? And, a last question, are we nearer to Socialism?

Speaking broadly, all of these questions must be answered in the negative. We have had reforms innumerable; Liberal reforms backed by the Labour Party; Tory reforms; and Labour reforms backed by Liberals. The political wheel has gone full circle. A Labour Party once subordinate to the Liberals has won to power, and now it is Mr. Lloyd George who must go each week to 10, Downing Street, for consultations on the joint Liberal-Labour policy.

But the enactment of reforms has been like pouring water into a leaky bucket, Nearly every additional expenditure by the Government on social reforms to remedy some pressing working-class evil has helped to lower the workers’ cost of living. What the workers have received in the shape of sick benefit, unemployed pay, etc., has been used by the employers as an excuse—admitted or unadmitted—for seeking to reduce wages. What has been gained at great effort in one direction has been wholly or partly taken away in another. As the Liberal economist, Professor Clay, admits in his book, “The Problem of Industrial Relations,” the increase in expenditure on social services has not been a clear addition to wages, but “has followed and to a large extent compensated for, the check to the rise in real wages . . . about the end of last century” (p. 249).

Up to about 1897 the purchasing power of the workers’ wages was rising. Since that date real wages have fallen. Against social services, therefore, must be set the decline in real wages and the increase in unemployment. Professor Clay admits that from 1895 to 1913 prices were rising more rapidly than wage rates, in spite of “a rapid increase in the country’s wealth” (ibid., p. 212).

Professor Pigou, writing in the Economic Journal for June, 1923, said : —

“The rate of real wages actually declined between the later ‘nineties and the outbreak of the Great War.”

The Labour Research Department (this is not a Labour Party organisation) made an attempt to compare real wages in the years from 1900 to 1928.

Their estimate was based on official figures, and allowed for unemployment and for changes in the cost of living. It showed that in 1928 the industrial workers were about 6 per cent. worse off than in 1900 and about 5 per cent. worse off than in 1914. (See L.R.D. Bulletin, January, 1929.)

The Labour Party’s own Research Department made a similar inquiry (see Labour Bulletin, June, 1929). They found that real wages, after allowing for changes in prices and in the amount of unemployment, were in 1928 practically the same as in 1914, but slightly less (1.6 per cent.) than in 1900. Since 1928, according to recent issues of the Labour Bulletin, real wages have fallen 3 per cent. or 4 per cent. They have continued to fall since the Labour Government came into office.

We do not claim for any of the estimates quoted above that they are more than approximate. The subject does not permit of absolute precision. They are sufficient, however, to indicate the trend of wages.

What we emphatically must say is that nothing has been achieved by the reform parties in the past thirty or forty years in any way commensurate with the vast expenditure of energy by two generations of enthusiastic supporters of the Labour Party. We do not believe that those who joined the Labour Party would have toiled for 31 years if they had realised then what small and uncertain results would come from their efforts. Would they have been so confident of the soundness of their policy if they could have foreseen that after all their labours the proportion of the national income received by the wage-earners would fall from 47.4 per cent. before the war to 45 per cent. to-day? That is the admission of the Daily Herald in its editorial on February 13th.

And none of the hardly won reforms are certain gains. A period of acute unemployment like the present, accompanied by wage reductions, may in a few months wipe out the savings of a lifetime and destroy the wage standards defended by years of effort. Then, in the midst of the hard struggle of the workers, Mr. Philip Snowden, Chancellor of the Exchequer, announces that we must all be prepared for sacrifices: “The sacrifice the workers might have to make would be a temporary suspension in schemes of social development.” (Report in Daily Herald, February 18th.)

The Labour Party believed in reforming capitalism, but finds when in power that those very capitalist evils which the reforms were to solve, themselves make further reforms impossible at the very time when the evils are greatest. What a fate for a thirty-years-old movement ! !

We prophesy that the Party which rose to power by exploiting the discontent arising from the effects of capitalism, and which undertook to deal with those effects, will be hoist with its own petard. Discontent made the Party. Sooner or later discontent will break it. Already Mosley and others have broken away.

The Socialist policy of tackling the cause of working class poverty, and abolishing the capitalist system of society, was unassailable in 1900 and is still the only way out for the working class.

Pity the Poor Capitalist. (1931)

From the March 1931 issue of the Socialist Standard

The Economist newspaper’s index of profits, based upon the accounts of 1,932 concerns, shows that the net profit, after payment of debenture interest, etc., was practically the same in 1929 and 1930, the respective totals being £198,800,000 and £197,500,000. The decline is only 0.6 per cent. (See Supplement, Feb. 14th, 1931.)

The rate of dividend on preference capital was slightly higher than in 1929 (5.7 per cent., as against 5.5 per cent.), while the average dividend on ordinary capital was lower (9.5 per cent., as against 10.5 per cent.).

The rates for the past ten years, and for five years before the war, are given below :

The Manchester Guardian (January 6th) published a list of profits of about 240 “important public companies.” More than half of them made higher profits in 1930 than in 1929, and the total profits in 1930 of all the companies (after deducting losses) amounted to over £8 million more than in 1929.

The Times published a summary of the profits of 176 British industrial concerns, “showing the broad tendency of profits in British industry as a whole.”

The average dividends in 1930 represented 8.4 per cent. of the paid-up capital, as compared with 8.2 per cent. in 1929. (See The Times Annual Financial Review, February 10th, 1931.)

The Banker’s Magazine Index of the market values of 365 securities shows that in December, 1930, the average value, while about 5 per cent. less than in December, 1929, was still 16.8 per cent. above the level of December, 1921. (See Economist monthly supplement, January 24th, 1931.)

Edgar Hardcastle

What is Capital? (1931)

From the March 1931 issue of the Socialist Standard

Capital is that part of wealth that is used to make a profit.

In order to produce commodities (that is, articles for sale) certain things are needed besides the worker’s labour-power. These are land, factory buildings, and machinery, motive power, in the form of steam, gas, or electricity, and raw materials. If the articles are chairs, then the raw materials required are wood and wire, canvas and cloth and many other things. Also the tools the workmen use, the motor lorries in which they deliver the goods, the typewriters and telephones and other office equipment. Now the money invested in all these things is capital, because they are used to make a profit for the owners. Even the money spent as wages paid to the workers, is capital, because it is paid with the idea of making profit for the employer.

Under Socialism, chairs and other useful articles will still be required. But as there will be no profit-making, no capital will be needed, either as wages or in any other way. The raw materials and machinery of production will be used by all who are able to work. There will be no propertied class of idlers. Society will produce goods for use, not for sale and profit-making.

J. E. Roe

How the Fascists Gained Power. (1931)

From the March 1931 issue of the Socialist Standard

In the February issue we made the statement that Mussolini came into power because, and only because, he had been placed in control of the armed forces through having behind him a Parliamentary majority. The importance of the question is that we hold the same opinion as Marx on the necessity of the workers obtaining control of the machinery of government before they can establish Socialism. We also hold Marx’s view that the vote will give that control. Two other theories—both held by the Communists and both dangerously impracticable—are that the workers can gain that control without the vote, i.e., by armed force, or, alternatively, that they can set up their own machinery of government in opposition to the capitalist State. The two views converge, because in practice the capitalist class, controlling the armed forces through their Parliamentary majority, will see to it that no rival armed force ever comes into being to challenge their supremacy.

Communists, anarchists, and our own queer tribe of imitators of the Italian black shirts are credulous enough to take Mussolini at his own face-value and to believe his stories about his great march on Rome in 1922.

We have received a letter from Mr. A. T. Rogers, an anarchist, telling us that our statement about Mussolini is a “thumping lie.”

He quotes another anarchist, R. Rocker, as follows :—

“When on August 30th, 1920, the employees of the factory “Romeo,” in Milan, reported for work, they found the gates locked and guarded by the military. This was the signal for the workers to assume charge of the factories and mills. Within a few days over 600 establishments were in the hands of the workers. In various towns, particularly in Rome, tenants refused to pay rent. To relieve congestion in the homes of the workers, etc., rich villas, mansions, etc., were requisitioned for use without the Government daring to interfere. In the province of Palermo peasants invested large estates of the great landowners and distributed the acres among the village corporations. Similar action was taken throughout Sicily and Southern Italy. What effect this movement had upon the Italian Government can be judged by the statement later made in Parliament by Giolitti. Replying to the charge that his Government had failed to act energetically in the matter, the Italian Premier declared ‘What could I do? Invest the industries by the army? But in Milan alone 600 mills and factories were in possession of the workers. I should have had to use the whole army to dispossess them, and then I would have had no more soldiers to keep the masses in check outside on the streets. Had we resorted to violence, and mobilised the whole army, the Imperial Guard and the carabinieri against the 500,000 workmen, then my critics know very well what it would have led to.'”

Mr. Rogers claims that the passage he quotes proves conclusively that the Parliamentary majority “was utterly and helplessly impotent till the Socialists had stabbed the workers in the back by secretly conniving with Giolitti.”

It is, in fact, quite true that Giolitti’s Government in 1920 did not at first take open action against the workers who had “occupied” the factories. What Mr. Rogers evidently does not know is that Giolitti and the friends whose interests he was looking after did not want the workers turned out. That and not “impotence” was the reason for Giolitti’s temporary inactivity.

The whole story was told by the correspondent in Italy of the New York Nation (8th March, 1922).

The Peronne Brothers, proprietors of the Ansaldo Iron and Steel Company, found themselves, after the war, in increasing financial difficulties. They and associated firms were opposed by the Banca Commerciale and Giolitti’s Government. Peronnes were tricked into resisting the demands of their workers by promises of support from the whole body of manufacturers. The occupation of the factories by the workers was not, as has been alleged, the first step in an attempted revolution, but was merely a tactical move in an industrial dispute. But when it had begun, Peronnes’ rivals made concessions to their own workers, and got Giolitti’s Government to delay taking action. to help Peronnes, who were, moreover, in such financial difficulties that they could not afford to pay the higher wages demanded.

The delay in taking action was, therefore, deliberate, and was a move in a conflict between rival capitalist interests. It was contrived for the purpose of damaging Peronnes. Where, and as soon as the Italian Government wanted to take action. it took it fast enough, and drastically enough. The following is a report from the Socialist (April 22nd, 1920). It is interesting to remember that the Socialist, and the Party whose organ it was—the British Socialist Labour Party—were themselves enthusiastic supporters of that particular piece of tomfoolery, the idea that unarmed workers can defy the armed forces of the State.

“At Novara one worker was shot and many wounded by the troops. The Royal Guards were ‘operating’ against the strikers. At Brescia the strike continues. One striker has been killed by the troops. The strike committee of 25 has been arrested. In Turin and Naples the workers invaded the factories from which they had been locked out, formed Soviets and proceeded to work as usual. They were not allowed to work in peace for long. Government troops were sent to storm the buildings. The factory at Turin was the famous F.I.A.T. automobile works. One worker was killed at Naples.”

So much for the occupation of the factories in 1920.

But the real point of our original statement was not merely the events in 1920, but the way in which the Fascists came to eventual power in 1922. We say that the deciding factor was the possession of the machinery of government, vested in Capitalist representatives by the democratic vote of the electors. Mr. Rogers says we err. Let us quote four Italian witnesses, a trade union official, a Communist, a Liberal and a member of the “Socialist Party of Italy.”

Ludovico D’Arragona, Secretary of the Italian General Confederation of Labour, writing in the Labour Magazine (February, 1923), said that the Fascists were “openly favoured by the State authority.”

Bordiga, Communist, wrote in the Labour Monthly (February and March, 1923):—

“After the Nitti, Giolitti, and Bonomi Governments, we had the Facta Cabinet. This type of Government was intended to cover up the complete liberty of action of Fascism in its expansion over the whole country. During the strike in August, 1922, several conflicts took place between the workers and the Fascisti, who were openly aided by the Government. One can quote the example of Bari. During a whole week of fighting, the Fascisti in full force were unable to defeat the Bari workers, who had retired to the working-class quarters of the city, and defended themselves by armed force. The Fascisti were forced to retreat, leaving several of their number on the field. But what did the Facta Government do? During the night they surrounded the old town with thousands of soldiers and hundreds of carabineers of the Royal Guard. In the harbour a torpedo boat trained its guns on the workers. Armoured cars and guns were brought up. The workers were taken by surprise during their sleep, the Proletarian leaders were arrested, and the Labour headquarters were occupied. This was the same throughout the country. Wherever Fascism had been beaten back by the workers the power of the State intervened; workers who resisted were shot down ; workers who were guilty of nothing but self-defence were arrested. Thus the State was the main factor in the development of Fascism.”

Professor Salvemini, a Liberal, gives similar testimony (Manchester Guardian, October 19th, 1927). He wrote :—

“Mussolini was assisted in the civil war (1921-1922) by the money of the banks, the big industrialists and landowners. His Black-shirts were equipped with rifles, bombs, machine guns and motor lorries by the military authorities, and assured of impunity by the police and the magistracy ; while their adversaries were disarmed and severely punished if they attempted resistance.”

And lastly Modigliani tells us (Daily Herald, October 27th, 1927) :—

“It was by their (the Italian Cabinet’s) contrivance and with the help of military forces of the State that Mussolini and his gangs were able not only to administer Castor Oil, but to murder and burn for two years. And it is in that way that they finally reached the point of the march on Rome, in face of which the King openly and personally sided with the anti-Labour onslaught.”

So much for Mr. Rogers and R. Rocker.

In conclusion, we would draw attention to the fact, reported at the time, that the commander of the military forces in Rome was, even at the eleventh hour, and in spite of the arms supplied to the Fascists, quite confident of his ability to disperse the black-shirts in a couple of hours. It was not Mussolini who prevented him, but the existing Italian Government, who ordered him to assist Mussolini.

Edgar Hardcastle

Under the Southern Cross. A Letter from Australia. (1931)

From the March 1931 issue of the Socialist Standard

To those workers in the Old World who obtain their ideas of life under the Southern Cross from school primers and entertaining magazine articles written by Capitalistic globe-trotters, Australia is depicted as a land of wealth and wonder, a semi-tropical and tropical paradise, a land of opportunity for all. Mention of Australia to many in the Old Country begets romantic visions of verdant pasture lands, vast goldfields, gigantic sheep and cattle stations, and a golden sun forever setting on a happy and prosperous population. Lured by attractive stories peddled by professional tale-tellers in Australia House and other Immigration Bureaux, thousands of workers have sought to escape the sordidness of Old World Capitalism in the New World “down under.”

In the early days of the pioneers certain opportunities existed in this country for the strong, energetic individuals who were prepared to battle with Nature and win the wealth from the soil and the mineral deposits. But times have changed, and the blighting hand of capitalism has obliterated some of the prettiest beauty spots and established in their place modern cities, containing all the incongruities of civilization. Murky channels have replaced sparkling streams; drab wharves and factories, warehouses and railway sidings have superseded grassy slopes and shady trees which once bordered the banks of the rivers. In place of the primitive system of society there has developed, as in the older countries, the complex system of capitalist society, with all its institutions.

How have the workers of Australia fared under these changing conditions? A brief survey will enable overseas workers to understand the conditions of the workers in this “land of opportunities.”

Wages Falling.

During recent years there has been a definite downward trend in the wages and standard of living of the workers here. In 1928 the Waterside Workers had their wages reduced, and conditions which had been strenuously fought for in the past were wiped out by the stroke of the pen of an Arbitration Court judge. Later the Timber Workers had to resist an attack on their wages and conditions of employment. Reductions running as high as 26s. per week, were imposed, and after a bitter struggle, during which many were jailed and more were batoned and bashed by the police for interfering with blacklegs, the Timber Workers were forced to capitulate. The miners of New South Wales were next attacked, and although they stood out solidly for fifteen months, during which time some of their number were shot dead by the armed thugs of the Capitalist class, they had finally to accept a 12½ per cent. reduction in wages. The irony of the defeat was that they had to surrender after they had helped to return the Labour Party to power, which party had made all sorts of promises to the miners during the election campaign. In almost every other branch of industry wages have been reduced and conditions worsened. To-day there are approximately 200,000 unemployed workers in Australia. So much for the conditions of the workers in the country which perpetually boasts of its incomparable standard of living.

The Australian Labour Party.

Time and again this Party has sat on the Government benches, and at the present time we have a Labour Government in the Federal House, and one in New South Wales, Victoria, and South Australia.

Under the Hogan Labour administration in Victoria, members of the Waterside Workers’ Federation were shot at and one killed, in 1928. Unemployed workers have been batoned and jailed. The wages of public servants, railwaymen, and others in Government employ have been reduced by order of the Government. Wholesale scabbery has been sanctified, and trade unions have been smashed under the regime of the Labour “stalwarts.”

Similar activities have been engaged in by the Labour Government of South Australia. Almost the first thing that the Lang Labour Government in New South Wales did on its taking over last month was to baton the unemployed, to whom Mr. Lang and his henchmen had promised the millennium. Mr. Lang recently purchased a most beautiful yacht, and some unkind critic suggested that he intends to use it as a means of escaping the sordid results of his own administration.

The Federal Labour Government is in a terrible dilemma. Having stated that they could run the system in the interests of all sections of the community, they now find that Capitalism can be administered in one way only, viz., in the interest of the Capitalist class. Every act they pass, and every move they make accentuates the position. Faced with the greatest depression in years, they have embarked upon an economy campaign which is resulting in thousands of workers being thrown out of their jobs. Their star contortionist, Mr. Theodore, has been tripped by a Royal Commission, which found him guilty of grave offences against the Capitalist class. This gentleman now knows that while the Master class does not mind what a Labour Politician takes from the workers, that class will not stand any interference with their own property. Owing to the finding of the Royal Commission, Mr. Theodore had to stand down from his position as Federal Treasurer, and most of his old friends now look askance at him. While the workers’ wages are being reduced, the Labour Prime Minister, “Jim” Scullin, is touring Europe attending to the affairs of the Australian Capitalist class.

The Communist Party.

This confusing gathering of self-styled revolutionaries presents the sorriest spectacle in Australian politics. For years it supported the anti-working class activities of the Labour Party, on the grounds that the workers would learn by experience. After denouncing’ the Labour Party as a reform party, it decided to run its own candidates in the last New South Wales elections. Putting forward about fifty-two candidates, they went to the electors on a Communist Reform Platform. Among their reforms were to be. found the following :—

• Work or maintenance for the unemployed.
• Equal pay to women and youth for equal work.
• The unrestricted right to organize and strike.
• Abolition of all wage taxes and all in come taxes on incomes under £400.
• Agricultural labourers and all poor and middle farmers to receive the basic industrial wage.
• Special grants of money for strike funds and for the relief of strikers and their dependents.
• In office, the Communists will attempt to disarm police and Capitalists, and organize an armed workers’ militia.
• Wage mass drives in defence of the Soviet Union, Hands off India campaigns, in defence of the Chinese Revolution.
• Repudiation of all War Debts, etc.

(C.P. Election Manifesto, N.S.W. elections, November, 1930.)

There you have the “revolutionary” aims of the self-styled “vanguard of the working class.” Attached to the Communist Party are dozens of other still-born children of the Russian Revolution. There is the Militant Minority Movement, the Young Communist Movement, the. I.C.W. P.A., the Friends of the Soviet Union, the Rank and File Movement, et alia. A meeting of the Communist Party is held, and there we find all the leading emancipationists. A visit to the M.M.M., and here we find the same faces with different official names. A walk into the I.C.W.P.A. meeting, and here they are again ! A peep into the meeting of the F.O.S.U., and once again we see the old familiar faces. The workers are slogged with slogans, confused with a myriad forms of organization, and misled by a million different ruses.

On the Committee of the I.C.W.P.A. are Labour Party politicians, yet the Labour Party jails the men whom the I.C.W.P.A. is attempting to get out. Unlike the pussy in the well, they are put in and pulled out (sometimes) by the same gang.

All the aforementioned Communist groups are out to usher in, like a thief in the night, the “dictatorship of the proletariat.” Anybody who refuses to follow their dictates and declines to have his or her head bashed in by the bobby’s truncheon is labelled a “defeatist” by these fanatical followers of the “new line” from Moscow.

The Socialist Party of Australia.

Our Party is gradually making itself felt amongst the workers. Small in numbers, and hampered by the confusion created by the Labour Party and the Communist Party, we find it difficult to keep afloat in the political maelstrom. Having Socialism for our objective, we do not expect, nor do we receive, any assistance from the Australian Capitalists or the Russian Capitalists. Nevertheless, we continue with our propaganda, holding our meetings and lectures when circumstances permit. Unemployment amongst our members has prevented us from getting out our Official Party Organ. Lack of finance is also a factor in the non-appearance of our paper. Without this latter we are seriously handicapped, but we are optimistic. The development of Capitalism in Australia is quickening, and we are development of Capitalism in Australia is quickening, and we are convinced that, when we are able to place our position fully before the workers, our efforts will not have been in vain. In spite of all the present drawbacks, we look to the future with hopes of success.

As soon as funds will permit and circumstances warrant it, we will run candidates during future elections and, despite the jibes of our opponents that the majority of the workers will never understand Socialism, we pin our hopes on the working class.

W. J. Clarke

(For the Socialist Party of Australia)

The Socialist Forum: Incentive under Socialism. (1931)

Letter to the Editors from the March 1931 issue of the Socialist Standard

A correspondent writes asking what will be the incentive under Socialism.

“Human nature being as it is—what incentive for hard work do you propose to put in the place of the desire for freedom from financial worries (both for themselves and those they respect and love), which alone drives men and women of good-will to create (at great cost to themselves) wealth from the resources of nature.

If left to all to set a common standard of life, that standard (besides being an extremely dull one) would be at a lower level than the more advanced would rightly be content to live. Would you drag all humanity down to a low level beyond which so many would not be prepared to work hard enough to go?”

Reply:

Human beings, whatever the social system under which they live, must either work to produce the necessities of life, get someone else to work for them, or die of starvation. Our correspondent apparently assumes that under capitalism the wealth and security of the rich results from their own efforts. This is not the case. The rich are rich simply by virtue of owning the means of production which are operated by the working class. We are faced, then, with the remarkable situation that the workers put up with a system in which they are working to enrich a propertied class. When they realise the nature of capitalism and the way in which it can be replaced by Socialism, we believe that they will take that way. We further believe that the members of society will not find it more difficult to co-operate in producing wealth for themselves than the workers now find it to produce wealth for the capitalist class. In view of the enormous and avoidable waste of capitalism, and in view of the admitted activities of capitalist Governments and industrial associations in restricting production, we are confident that life under Socialism will not be at a low standard. It is for our correspondent to give his, reasons for believing that it will.

Editorial Committee.

The Socialist Forum: A Question on Rent. (1931)

Letter to the Editors from the March 1931 issue of the Socialist Standard

A reader in St. John, N.B., Canada, asks a question about rent.

“Does the rent that the worker receives as part of his pay become part of surplus-value after the landlord gets it, or is it only the building labourers, etc., who are exploited by the landlord.”

Reply:

The worker is exploited when he works, not when he buys things—whether he buys food, clothing or shelter. The position as regards the rent paid by the workers is the same as in the case of other necessities of life bought with their wages. Rent is the price the workers pay for shelter, and it figures as part of their cost of living. Where rents are low, wages will tend to be low also. The landlord is in the position of other capitalists. Subject to various factors, which interfere with the tendency towards a uniform percentage return on all capitals invested, the landlords will tend to receive the same return on capital invested in house-building or house-purchase as they would receive if they invested in any other investment field.

Editorial Committee.

The Socialist Forum: Bank Loans and Deposits. (1931)

Letter to the Editors from the March 1931 issue of the Socialist Standard

Two readers (W. Nicholls and E. Wright) draw attention to the address delivered by Mr. McKenna at the shareholders’ meeting of the Midland Bank. In the course of the address Mr. McKenna said : “It is evident that more money was created than trade actually needed.” These two readers both ask who “created the money” if the banks did not.

What these readers have not allowed for is Mr. McKenna’s notoriously loose use of words. If we had only this phrase to go upon, we might believe (as our critics want us to) that Mr. McKenna still holds the view which he is once alleged to have expressed in the phrase, “Every bank loan creates a deposit,” i.e., the theory which. Mr. Wright puts as follows : “Banks create money and lend it, using it as capital and so get interest for nothing.”

If, however, we read the whole of the passage in which Mr. McKenna dealt with the subject, he makes it quite clear that he does not hold that absurd view. In his speech he pointed out that during 1930 the amount of loans by the Midland Bank decreased while deposits increased by many millions of pounds. (For the whole of the banks on the London Clearing House, loans and advances in 1930 decreased by £50 million, while deposits increased by £72 million.)

What Mr. McKcnna really thinks can be seen from his speech at the shareholders’ meeting on January 22nd, 1930) (see Times, January 23rd, 1930) :—

“It is a common notion to judge from speeches and letters in the Press, that the banks have an inexhaustible power of lending money to industrial enterprises, and that any industry suffering from general depression could be restored to prosperity if only what is termed a more generous policy were adopted by the banks. (Laughter!) A moment’s reflection, however, will show that the banks have no inexhaustible fund to draw upon. The sums they lend are balanced by amounts due to depositors, who would certainly not rest content unless confident that their money was being wisely used and could be repaid to them at any time.”

The reply to the question, Who did “create,” if not the banks? is that the working class produce wealth by applying their labour-power to natural resources. The wealth when produced belongs to the capitalists. In the early days of capitalism they carried on the process of exchange (i.e., buying and selling) through the medium of gold. With the rise of the banks the latter, using a relatively smaller quantity of gold, act as intermediates between capitalist owners of various kinds of goods. Bank deposits represent in money terms some of the commodities which the working class have produced for the capitalists. Purchasing power arises from the ownership of wealth and cannot be “created.” Banks act as agents for facilitating exchange between owners.

Editorial Committee.

SPGB Meetings (1931)

Party News from the March 1931 issue of the Socialist Standard

The Case Against The 'Living Wage'. (1931)

From the March 1931 issue of the Socialist Standard

Maxton's Curious Mixture.

On February 6th, Mr. Maxton, on behalf of the Independent Labour Party, introduced into the House of Commons a Living Wage Bill. -

The Living Wage, as defined in the Bill, "means a wage at least sufficient to meet the normal needs of the average worker regarded as a human being living in a civilised community, including the satisfaction of reasonable minimum requirements of health and efficiency and of cultural life and the provision of reasonable rest and recreation."

The amount of this living wage is to be determined by a Committee, appointed by the Board of Trade, "and which shall include among its members at least three working housewives, three representatives of trade unions, and three representatives of co-operative societies.”

The Committee is to take into account "actual retail prices and other costs of living,” in addition to various other factors, and is to review the wage at least once a year. 

The wage is then to be made obligatory on Government departments, local authorities, Government contractors, and finally on all industries. That is to say, no industry may pay less than this minimum. Should any industry not be able to afford the wage, a body called the "National Industrial Reorganisation Commission” is to have power to re-organise the industry.

The I.L.P.'s Main Plank.

Mr. Maxton explained in his House of Commons speech that the living wage proposals are the basis upon which the whole programme of the I.L.P. is built up. The programme includes many items, from increased pensions and increased unemployment pay, to nationalisation of the banks and the principal industries, and State control of the import and export trade; but "this proposal for a living wage is a pivotal proposal round which all the others are arranged.”

Miss Jennie Lee, M.P., whose name also appears on the Bill, went further and admitted that the "pivotal proposal” cannot be applied without the other proposals also being applied. She said :—

  I do not pretend that this Bill could be carried into effect without great stress and great difficulties in the country. I believe that it would mean that we should have to go in for controlled prices, and once we got on to controlled prices we shall have to control the banking system.

Let us now examine the theory behind the Living Wage Bill and ask ourselves whether its effects will be worth the time and trouble necessary to apply it. Is it worth the "great stress and great difficulties,” together with all the further measures which Miss Lee admits are necessary?

What is a Living Wage?

The backers of the Bill claim to have defined a living wage. But have they? What are "normal needs”? What is an "average worker regarded as a human being”? What are the "reasonable requirements of a civilised community”? What amount of rest and recreation are "reasonable”?

The employers regard as "reasonable” any wage which makes the worker an efficient producer of profits. Hundreds of thousands of workers in the cotton mills, on the railways, in the Civil Service and Post Office, on the land and in the mines, are getting well under 40s. for a full week's work. Miss Dorothy Evans, Secretary of the Association of Women Clerks, is reported in the Daily Herald (February 19th) as stating that women clerks in the Civil Service, 21 years of age, are paid as little as 24s. 7d. in the provinces and 31s. in London. The Daily Herald on February 17th reported that the pay of farm workers in Suffolk had just been reduced from 30s. to 28s. a week.

This last case is of special interest because agricultural workers already have their “living wage” fixed by law! The Agricultural Wages Act, 1924, passed by the Labour Government (which the I.L.P. claimed was an essentially I.L.P. Government) lays it down that the minimum wage paid to an able-bodied agricultural worker shall be

   adequate to promote efficiency and to enable a man in an ordinary case to maintain himself and his family in accordance with such standard of comfort as may be reasonable in relation to the nature of his occupation:

Translated into hard cash, this means 28s. or 30s. a week!

All Mr. Maxton proposes to do, in effect, is to substitute his nebulous phrase for the nebulous phrase in the above Act, and apply it all round.

Employers To Fix The Wage.

The Bill provides that the wage shall be fixed by a Committee including working women, trade unionists and co-operative society representatives.

The Bill does not say how many persons the Committee shall consist of, nor does it say what other interests are to be represented. It is, however, to include employers.

When the seconder, Mr. Kirkwood, M.P., was asked if employers are to be excluded, he replied, “They are not excluded ” (Hansard, February 6th, col. 2297).

So we have this extraordinary position put up by a so-called working-class party, the I.L.P., that they want the employing class to have a hand in fixing what is a living wage for the workers whom they exploit!

It will be noticed, also, that the co-operative societies are expressly brought in. Why? Does it need legislation to allow the co-operative societies to pay their own employees a living wage? The co-operative societies constantly have strikes and lockouts in their concerns, and have on several occasions been charged by their employees with paying less even than the standard rates of pay. Within the past few months there has been a strike of co-operative employees—the insurance agents. Yet the I.L.P. wants the co-operative societies, with their characteristic petty employer's outlook, to sit,with other employers on the Living Wage Committee. The extent to which the co-operative societies exploit the workers in their employ is shown by the amount of wages, and the amount of profits. The retail distributive societies in 1929 (see New Leader, February 6th) paid an average amount of £130 during the year to its wage-earning and salaried staff. The surplus left after meeting all trading expenses was over £22 million pounds, equal to a further £148 per head of the staff of 176,000. They could double the wages of their workers and still have a surplus. Why does not Mr. Maxton start his living wage campaign among his friends, the co-operators?

Another important point emerges from the composition of the Living Wage Committee. It is usual on committees of this kind for the Government to appoint equal numbers of workers’ and employers’ representatives, together with some so-called "neutral” members representing the Government. Seeing that the Labour Government during their present term of office have appointed at least two wage committees which have recommended lower wages, it certainly cannot be assumed that Labour Government representatives on a Living Wage Committee would press for a wage higher than present wages. On the other hand, the co-operators who would be there to look after their own interests as employers are regarded by Mr. Maxton as being on the workers’ side. So that in fact the Living Wage Committee will be dominated by employers.

Living Wage or Lower Wage?

How much will the minimum wage be? We are given some indication that it will actually be lower than the present average wage of industrial workers.

Miss Eleanor Rathbone, M.P., the enthusiast for lower wages by means of family allowances, gave her conditional blessing to the Bill, but wanted to be assured that the wage would not be enough to keep a family, but only enough to keep a man and wife. Miss Jennie Lee, M.P., gave the desired assurance (Hansard, February 6th, col. 2313). The effect of this is obvious, and it is the effect which Miss Rathbone makes no secret of desiring. It would mean that all unmarried and childless workers would be paid less than the standard rate of wages—to the benefit of the employing class, who would get a supply of cheaper labour. In view of the composition of the Committee, the “living wage” might well be below the present average wage of industrial workers.

The Australian Model.

A memorandum attached to the Bill refers to the Australian attempts to fix and apply a “living wage.” The reference is interesting, because it gives a practical illustration of the futility of the whole scheme. In Australia a “living wage” was fixed before the war, and the scheme has had a run of about twenty years.

Mr. Maxton claims for the living wage proposal that it would permanently raise the standard of living of the workers, and be a definite step towards Socialism. Australian experience shows that it does neither.

In the Australian Senate, on November 14th, 1930, Senator Daly, for the Government, gave the information that, after allowing for the increase in unemployment and the increase in prices, the average real wage in 1929-30 was almost exactly the same as it was in 1911-12. Then in January of this year the Arbitration Court ordered a reduction of 10 per cent. in the basic wage (see Daily Telegraph, January 23rd). This reduction is quite separate from the regular adjustments for alterations in the cost of living. So that after twenty years of “living wageism” the Australian workers are now 10 per cent. worse off than when they started, and are not one iota nearer to Socialism than they were then. That is how capitalism has worked havoc with all the pretty but false theories of the Australian reformers of capitalism. Capitalism here would quickly falsify every one of the flashy. promises of the I.L.P.

Capitalism and Wages.

The living wage scheme is as full of holes as a sieve. Every attempt to fix a statutory wage has run up against the snag of unemployment. If the living wage is not higher than the existing one, it is useless. If it is higher, it will give the employers an added inducement to instal labour-saving machinery and thus increase unemployment. This tendency to instal machines operates in agriculture to-day, in spite of the low level of wages fixed by the Wages Committees.

How is the living wage to be enforced? Anyone who has seen at close hand the operation of the Agricultural Wages Act knows that in many districts the minimum rates are largely ignored. The men prefer to take less than the minimum rather than lose their employment. What remedy has the I.L.P. to offer for that? What will it do with the older men and, those not up to the average standard of fitness who will be sacked to make way for young and fit workers?

It is no answer to say that the I.L.P. also proposes to nationalise various industries. State capitalism, as applied in the Post Office, leaves the worker subject to practically all of the forces which face him in private capitalist concerns. The process of selection and throwing out the less fit men and women goes on in the Post Office as on the land and in the mines and elsewhere, although in the Post Office the method of securing the same end is slightly different. The workers in State industries suffer the additional disadvantage that they cannot seek similar employment with a different employer.

Patching Up Capitalism.

And what justification can the I.L.P. offer for a proposal which in effect is patching up the capitalist system? Mr. Maxton expected that criticism and tried to forestall it. In an interview given to the New Leader (February 6th) he said :—

  I admit that the old method of approaching the living wage problem would be correctly described as patching up capitalism. . . . Our approach is fundamentally different.

This, incidentally, is an admission that the I.L.P. ’s past policy for most of the period of the party’s existence has been a policy of patching up capitalism, as indeed was avowed by Mr. Wheatley in reference to the Housing Act he introduced as Minister of Health in the 1924 Labour Government.

The only difference Mr. Maxton could point to was that the present scheme is not based on what any particular industry can afford to pay, but on what the “nation” can afford. This is a distinction without a difference. The two schemes have precisely the same fundamental defect that they leave the capitalist system intact, and leave the capitalist class in ownership and control of the means of life. Does Mr. Maxton think that the capitalist class as a body will show a different attitude towards the wages question because they are approached nationally instead of industrially? He gives his own answer when he quotes Civil Servants as being people who are already “guaranteed a minimum wage” and whose good fortune he wishes to extend to other workers. Thousands of Civil Servants—adults working a full week —receive less than 40s. Yet influential bodies of employers constantly complain that the levels of pay in the Civil Service are too high and should be reduced. A demand has just been made to the Government by an employers' association, that Civil Service wages should be reduced to the level of the depressed export trades (see Times, February 20th). A postman, aged 32, charged with theft at Kingston, on February 21st, was receiving 49s. Id. per week. Out of this he had to keep a wife and two children and was paying 27s. 6d. a week rent (Evening News, February 21st). Mr. Maxton is a supporter of State capitalism as it exists in the Post Office, and wants to solve the workers' problems by extending that system.

Socialism The Only Remedy.

The only solution for the economic problems of the workers is Socialism. Chasing after the endless revivals of old fallacies evolved by the perverted ingenuity of the I.L.P. has brought them no lasting advantage. It has diverted their attention from things that really matter and has left them as far as ever from achieving Socialism.

Even as regards making the best of capitalism, the living wage scheme is an illusion. It is no substitute for trade unionism—Mr. Maxton admits that—it is not an improvement on trade unionism, and it is open to serious objections from which the former is free. In Australia the 10 per cent. reduction in the basic wage, referred to above, has taken place in spite of a Labour Federal Government. Resistance to the award of the Arbitration Court set up by the Australian Maxtons devolves upon the trade unions.

A measure of the irresponsibility of the I.L.P. is provided by the speech of Mr. David Kirkwood, seconding the Bill. He was asked from what source any higher wage would come. Instead of replying that an increase in the wages of the workers would be at the expense of the employers' profits, he informed an amused House of Commons that wealth can be created without limit merely by printing more bank notes.

It does not seem to have occurred to Messrs. Maxton and Kirkwood that if their money theory is sound, it is a sheer waste of time and trouble to print bank notes at all. Why not issue free blanks to the workers and let them write their own bank notes? Or, better still, solve the street litter problem by presenting used-up bus tickets over the counter in payment for goods ?

It was a curious but appropriate coincidence that on the day of Mr. Kirkwood's speech a very similar purveyor of quack nostrums—a German who collected money on the strength of a claim that he knew how to create gold out of base metals— was sentenced to a longish term of imprisonment. Political quacks who trade on the ignorance and trustfulness of the working class suffer no such penalties.

Edgar Hardcastle

A Cock-Eyed World: Some Items From The Press. (1931)

From the March 1931 issue of the Socialist Standard

The National Union of Boot and Shoe Operatives, in its report for the half-year ended December 31st, 1930, reports that

   the ordinary and legitimate requirements of the public can be met by full-time production during eight months of the year, unemployment and under-employment must continue until such time as we have the good sense to relate our hours to the productive capacity of the industry. (The Times, February 5th, 1931.)
   In several cases at Merthyr Police Court recently summonses against parents for not sending their children to school were adjourned on the plea that the children had no boots. News-Chronicle, February 11th, 1931.

The News-Chronicle on January 28th reported from Caerphilly, a mining area, that several charges were heard on the previous day of men caught stealing coal.

   One man said he had two babies suffering from bronchitis, and they were cold, as he had no coal. He lived in a damp place at the rear of a shop. He had five children, the eldest being eight, and could not send them to school because they had no boots or clothes. He was ordered to pay 5s.
   Another offender said that, although working, he had no coal in the house. He had 12 children to keep.

A Diary of Labour Government. (1931)

From the March 1931 issue of the Socialist Standard

Here in Great Britain, about twenty-seven years ago, there was a sharp difference of opinion. There were those who held that there was but one cause of working-class poverty, and one only, and but one way to end it. These formed the Socialist Party of Great Britain, with the aim and object of capturing political power and achieving Socialism. There were others who denounced this as a dream, too far removed from present needs to be practicable. What was wanted, they said, was something now, something tangible, something realisable, something which we could see in our time. These supported immediate reforms, palliatives, and the Labour Party. They have been wonderfully fortunate. In a mere twenty-five years they have achieved their practical object and seated a Labour Government in Parliament. That Government has been there nearly two years, and we think we may be doing posterity a service by setting down a rough diary of what life for the workers means under a Labour Government. Something now was their object; this is the something.

On January 1st, 1931, two and a half millions of working men were unable to find a master. On this day, also, 161,300 miners were locked out in South Wales.

On January 2nd the railways of the country announced they contemplated spending £30,000,000 on improvements. Meanwhile, they were negotiating with their employees to slice £11,000,000 off their wages.

About this time, some thousands of cotton workers were locked out because they protested against an intensification of their work, and more thousands of boot and shoe operatives and agricultural workers were threatened with wage cuts. Labour was still in power.

A man named Lansbury, a high Labour official, wrote to the Press suggesting that what was really needed was more prayers and Christian spirit.

A feeble-witted Christian, known as Jix, hurried to assure the people that Mr. Lansbury was quite wrong, and that Christianity had nothing to do with politics.

On January 12th the Daily Herald, Labour’s own newspaper, announced that "business men realised that the Daily Herald is a magnificent business-building power.”

On January 13th the papers announced that 27,000 tinplate workers were to be thrown out of work. Labour was still in power.

On January 16th, such was the poverty of the nation, ground down with the burden of taxation, and such the need for national economy, that the two Royal Princes started out with a shipload of accessories on an 18,000 miles tour.

January 19th.—The official attack on the railwaymen opened. Official figures of unemployed, 2,608,406. Labour still in power.

January 20th.—Miss Ellen Wilkinson, one of the Labour Government, hard at work solving the workers' problems by touring America, writes that she is astonished at the bread-lines in New York. What says the Bible: “The fool has his eyes on the ends of the earth.”

Speaking of the Bible recalls that on January 20th an article in the News Chronicle records the appalling poverty of the clergy. It seems that their average salary is only £350 per annum—nearly £7 per week. How do they live, poor men? The railway companies suggest 38s. per week for their rapacious hirelings. Yes! Labour is still in power.

There was a tremendous happening about this time. The Labour Government was defeated. In the midst of this poverty, unemployment and slaughter of working-class wages, they made a determined stand on one phase of the question of religion in schools. The Roman Catholics, perhaps the most fanatical opposers of Socialism in existence, represented that the Government’s Education Bill would cost them £1,000,000, and wanted a guarantee that it would not come out of their own pockets. Labour members rallied to the Catholic standard and defeated their own Government by 33 votes. Did the Government resign? Of course not; they must continue the good work of getting something now.

January 20th.—Ramsay MacDonald (re Princess Royal) “moved a humble address to assure His Majesty that this House will ever participate with the most affectionate and dutiful attachment in whatever may concern the feelings and interests of His Majesty.”

January 23rd.—Another determined stand made on the Trades Disputes Bill. The great question was, whether the Labour Party shall have the power to grab the coppers of uninterested trade unionists or not. A Second Reading was obtained with a majority of 27. They breathe again. The poor remained poor, the unemployed remained workless, and the victims of wage cuts remained cut. The Labour Government was still in office.

On January 26th the Labour Government, friends of the poor, the downtrodden and the helpless, released an agitator named Gandhi (whom they had held in prison very much like Capitalist Governments do), but overlooked 60,000 of his pals who had been awaiting trial since May 5th.

January 30th.—Whitehaven pit disaster; 26 miners killed. The News Chronicle suggests, in view of frequent mishaps at this pit, that an enquiry be instituted. They are twenty years late. We commented upon a worse happening in the same pit as long ago as that. Those in favour of “something now,” please note.

Just to wind up the month, on January 31st Mr. Graham indicated (according to the News Chronicle) that the Government accepted the Liberal proposals for unemployment. He is credited with saying: “The simple truth is that the industrial problem is now so grave that the old division of parties becomes' meaningless.” An equally simple truth is that the old division referred to has never been more than simple eyewash. Mr. Graham is thirty years behind the times. He should give his newsagent an order for the regular delivery of The Socialist Standard.

However, this has not been an entirely dull month. There were 300 guests at the Hunt Ball held at Newnham Abbey, and Lady Houston offered £100,000 so that Great Britain should be able to compete for the Schneider Cup. She gave this to implement her belief that one Englishman was still worth three foreigners. Our engineers —also worth three foreigners—were told that their wages—average 58s. 1½d.—were too high, and would have to come down to a level that would enable us to beat the foreigner. No! not altogether a dull month. The poor remain poor, the unemployed remain workless, and wage cuts are as regular as a bacon-slicer.

Of course, space is too precious in our little Standard for diaries of this description, but—unless one takes a tragic view of poverty and unemployment—they can be quite amusing. For instance, on February 3rd the House of Commons engrossed itself in the Representation of the People Bill. The question of the City of London retaining special representation was discussed. Mr. Clynes, a Labour man, said “ it was inconceivable that it should not be represented in the House.”

Inconceivable, mark you! Those who are still looking for “something now” will be relieved to hear that under the heading, “Business Done,” for this day appears “A Bill for the better protection of trout in Scotland, read a first time.” No doubt this is the Bill that caused a drop of 27,000 in the unemployed this week. On February 4th it was stated there were only 2,592,650 without a master in the week ending January 26th. This was before the Trout Bill was passed. 

On February 5th Mr. Lansbury, ever practical, ever a realist, brought us back to the facts of working-class life by intimating that he had finally approved of the Haig statue. The Engineering Employers; somewhat more out of touch with reality, delivered their ultimatum to their workers, worsening hours, wages and conditions, and threatening “if you or your members fail to make your contribution . . .  to take what steps they consider necessary.”

“Something now” is a curious policy, isn’t it! Why not try the other way? Socialism, next year, if we can’t get it before, but—nothing less! 

W. T. Hopley