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.

The Labour Party Supports Capitalism (1995)

From the May 1995 issue of the Socialist Standard

The Labour Party stands for capitalism:

“A dynamic economy, serving the public interest, in which the enterprise of the market and the rigour of competition are joined with the forces of partnership and co-operation to produce the wealth the nation needs and the opportunity for all to work and prosper, with a thriving private sector and high quality public services, where those undertakings essential to the common good are either owned by the public or accountable to them. ” 

The Socialist Party stands for socialism:

"The establishment of a system of society based upon the common 
ownership and democratic control of the means and instruments for
producing and distributing wealth by and in the interest of the whole
community."

Clause Four is dead. Long live Clause Four! The Labour leadership has decided that it must at all costs win the next election, and that the best way to do this is to modernise, to fudge, to adopt a new credo, to waffle, to change, to water down, to reform, to flannel. All of these words—and many others—have been used by friends and foes of the Labour Party to describe the intent and effect of its new Clause Four

All the discussion, the evaluation, the commentary, the prolix prose would seem to suggest that something really significant has changed in Labour Party policy. It hasn't. To amend slightly the observation of Michael Mansfield QC, it took the Webbs 60 words to say that the Labour Party offers only the reform of capitalism—it takes Blair 300

The new Clause Four mentions “socialist” once (as a label for the Labour Party) and capitalism not at all. The “socialist” label is transparently a con because the new version makes it clear (insofar as it makes anything clear) that the money and profit system will remain under labour: “the enterprise of the market . . . the rigour of competition . . . a thriving private sector". No matter that such guarantees of free-market capitalism are accompanied by references to co-operation and public service—this kind of mixed economy is offered by the other parties supporting capitalism, too.

It is instructive (or at least amusing) to read the reactions of some Tories to Clausc Four Mark 2. Douglas Hurd is reported as warning Conservatives to be ready to repel piratical labour boarders: "Mr Blair is trying to board the Conservative ship and run up his own flag on our masthead. ”

This picture of a swashbuckling Blair contrasts with his bleak record of selecting questions to the prime Minister. According to Matthew Parris (Times, 14 March) Blair has "never backed any public sector pay demand. . . not supported the teachers . . . never once complained about welfare benefits for the poor: about poverty; or about homelessness . . . never directly contested any past privatisation . . . never touched the subject of labour relations or trades unions ". Instead he has most often made points about fat cats, European unity and Tory sleaze.

The real question for electors is not whether Bambi’s blather is more likely to win votes for Labour than the Webbs’ more concise but antiquated Clause Four. It is whether any party that, openly or by inference, promises only the reform of capitalism is worth supporting Previous Labour governments were elected on programmes that were manifestly much less conservative than Blair's—but they still froze workers’ wages, broke strikes, cut welfare benefits, and deployed weapons of mass destruction against the populations of other countries.

Labour leaders need to have followers, as indeed do the leaders of all the other, anti-socialist, parties. The tragedy is that the followers, against their best interest, want to be followers. Until they decide to think and act for themselves, we can expect the clauses of the policy statements to get longer and the vision of the leaders to get shorter.

Stan Parker

Cooking the Books: The Other Adam Smith (2015)

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

‘Socialist flat-earthers must wake up to reality,’ ran the headline in an article in the Times (11 June) by ex-Tory MP Matthew Parris, ‘Capitalism has conclusively won the day but Conservatives need to get over their reluctance to defend private profit.’ According to him, ‘free-market economics’ has been proved right compared with ‘socialist economics’ just as Darwin’s theory of evolution has when compared with creationism; so ‘socialist economics’ should be treated in the same way as creationism.

‘This century’s intellectual consensus should show Marxism the door. Whether strictly defined as public ownership of the means of production, distribution and exchange, or more loosely as state direction of the “commanding heights” of the economy, socialism must be counted as definitively discredited.’

He’s talking about state-run capitalism of course, not genuine socialism. As a way of running capitalism it could be said to have failed (certainly failed to improve workers’ lives), though not to the extent that Parris suggests. The state is involved so much today in the running of capitalism, via taxes, subsidies, regulations, laws and economic policies, that to call the modern capitalist economy a ‘free-market’ is a misnomer. It’s a state-regulated production for profit market economy.

Basic to any form of capitalism is the pursuit of profit. This is what drives the economy, whether it is the private profit of private capitalist firms or the surplus of state-owned industries. Where, as in most countries currently, most industry is owned and operated by private enterprises, governments have to recognise that these enterprises have to be allowed to pursue profits. All governments have to be ‘business-friendly’ to avoid provoking an economic slowdown.  As Parris put it,

‘You cannot have free-market economics without the profit motive. You cannot have the profit motive without letting the pursuit of private profit weave itself intimately into the fabric of ordinary citizens' lives.’

He wants Adam Smith to be taught in schools in the same way Darwin is ‘as a scientist whose analysis is now the consensus amongst most thinking people.’ Smith certainly tried to analyse in a scientific way the market economy that operated in his day and he did correctly conclude that, under it, ‘it is only for the sake of profit that any man employs a capital in the support of industry’ and that:

‘The consideration of his own private profit is the sole motive which determines the owner of any capital to employ it either in agriculture, in manufactures, or in some particular branch of the wholesale or retail trade.’

There is no harm in teaching this scientifically-established fact in schools, irrespective of whether or not this is considered the best way to organise the production and distribution of wealth (which it isn’t but it’s what we’ve got). There are other things in Smith. He outlined a labour theory of value (Marx got the idea from him) and suggested that it was labour that added value to materials in the course of production and that this was the source of profits as well as wages. As he put it:

‘The value which the workmen add to the materials … resolves itself … into two parts, of which the one pays their wages, the other the profits of their employer …. He could have no interest to employ them unless he expected from the sale of their work something more than what was sufficient to replace his stock to him.’

Labour as the source of profits! This may explain the reluctance that Parris noted of supporters of capitalism to defend private profit as this would have to involve defending the exploitation of labour.