So They Say: Non-starters (1977)

The So They Say Column from the July 1977 issue of the Socialist Standard

Non-starters

The Labour Party is always assuring us that they stand for a “fairer and more just society” (Mr. Ron Hayward, General Secretary of the Labour Party, 15th March) but we think it reasonable to add that all of the parties who try to run capitalism would claim the same. Circumstances however always seem to intervene before they, or the others, can actually put their words into action. As unemployment and prices rise, as they have done under the Labour Government, and wages and public services fall, there are the men like Mr. Hayward talking about the unfortunate circumstances which newly confront us and so prevent “the fairer and more just” from taking immediate effect.

Were a bookmaker to assure his clients that he stood for “fairer and more just” racing results so that all of them would win, they would know that something was up. When the Labour Party does it, and explains the inevitable losses in terms of circumstances—the going as usual got rougher than we thought and you’ve all lost again—it should signal the time to stop betting on these three-legged creatures.

Winning

To be fair to Mr. Hayward and other members of the Labour Party, they do not give pride of place to this notion of a “fairer and more just society.” This is usually thrown in as an after-thought, and Labour supporters should not put too much weight on it. They would be best advised to put none at all, which would at least make honest men and women of them. Mr. Hayward has identified the fundamental objective of Labour.

Membership of the Party involves joining an organisation whose objective is to win and retain power in order to reform our society in the direction of our democratic socialist beliefs and ideals. Let me emphasise that objective—to win and retain power.

News Release:  Party Information Dept. 15th March 77

And having won and retained it, to let the workers face the circumstances.

The Self-Interest Thing

The director of the US Office of Population is concerned about “over-population”—a term used in capitalist society to justify the starvation, or near starvation, of millions, while alongside them exist the privately owned means to meet their requirements of food, clothing and shelter. Overpopulation to the capitalist and his well-fed entourage refers to those who cannot be used in the process of accumulating wealth. Dr. R. T. Ravenholt, the aforementioned Director, describes as his office’s aim the creation of medical technology to render infertile 100 million women in developing countries. This they call “advanced fertility management” and the programme they have launched will operate over the next nine years.

Although different people will draw different moral conclusions on the correctness of the programme, this should be seen for what it is, a capitalist “solution” to a “problem” which has arisen because the capitalist mode of production denies access to the means of life, unless it makes a profit for someone. That the means of life are in existence, or could be readily brought into existence, is irrelevant in this society.

The US Office of Population does not plan to limit future generations in an attempt to curtail misery from any moral standpoint however, their Director was most explicit on the intentions: Population control was needed to maintain

the normal operation of US commercial interests around the world. Without our trying to help these countries with their economic and social development, the world would rebel against the strong US commercial presence. The self-interest thing is a compelling element. If the population explosion proceeds unchecked, said Dr. Ravenholt, it will cause such terrible economic conditions abroad that revolution will ensue.

London Evening Standard, 11th May 77

Confessions

There is a strange figure who occasionally appears in detective stories and radio plays, best described as "the innocent man who proclaims his guilt.” Inevitably towards the end, this gallant red-herring is discovered, and receives a minor ticking-off because he had acted from the best intentions. How then are we to take India’s Prime Minister, Mr. Maraji Desai, who gave a press-conference on his way to the Commonwealth Conference.

Would India sign the nuclear non-proliferation treaty? Certainly, he replied, when those asking me decide to give up nuclear weapons. Those who commit thefts have no business to tell me not to be a thief.

The Times, 8th June 77

Mr. Desai, it will be remembered, is not a character in a radio play.

Of his own colour too

One of the more colourful scientific debates centres around the probability of 100 chimpanzees, who are confined in a roomful of typewriters together with an endless supply of paper, being able to bang out by accident the entire works of Shakespeare within a given period. Although highly improbable, it is generally conceded that the task is not impossible. The odds of success for the chimps are in fact infinitely higher than those of the eight international economists who have been confined for some time deep within the Organisation for Economic Cooperation and Development’s centre in an attempt to find “a path out of the economic quagmire which threatened to end more than two decades of growth and high employment.” They have been working on the premise that it is possible to remove capitalism’s problems, without removing capitalism 

The chief primate in the group, Mr. Paul McCracken, has offered their version of “the complete works” after only two years confinement, which, as far as probability goes, is stretching belief. We do not know how many typewriters they had at their disposal, but this is the result.

Fitting budgetary targets into regularly revised medium term projections would provide the required flexibility to adjust the longer-run budget posture to unexpected events and changing public preferences with regard to longer-term economic and social priorities.

The Times, 10th June 77

Roughly translated this means that their solution, in Shakespeare’s words “is shaped sir, like itself, and it is as broad as it hath breadth; it is just so high as it is and moves with its own organs; it lives by that which nourishes it; and the elements once out of it, it transmigrates.” These economists are learned men indeed.

Alan D'Arcy

Cooking the Books: A salaried economy, no thanks (2009)

The Cooking the Books column from the September 2009 issue of the Socialist Standard

“ From the hawkers, rickshaw drivers and shoe shiners on the streets of downtown Jakarta to the cash-in-hand car mechanics, cleaners and nannies in the smart neighbourhoods of London, the underground economy is booming”, said the Times (24 April) commenting on a report that the Organisation for Economic Co-operation and Development (OECD) had just published. Entitled Is Informal Normal?, the report estimated, according the Times, that in the world “a record 1.8 billion workers are employed in underground activities, compared with 1.2 billion in the formal sector”.

Actually, “underground activities” is inaccurate. The term preferred by the OECD is “informal” by which they mean buying and selling activities that are not declared to the tax or social security authorities. In developed capitalists such undeclared economic activities are “underground” but are only marginal. In other parts of the world, however, – India, Indonesia, most of Latin America, Asia and Africa in fact – they amount to over 50 percent. This is mainly because they don’t have to be declared. In a chapter on “Informal Employment and Promoting the Transition to a Salaried Economy” an earlier OECD report explained:

“In less-developed non-OECD countries, statistical estimates usually include purely informal work, which is unregistered but not hidden because there is no effective requirement for it to be declared. Formal employment with payment of tax and social security contributions becomes an ‘island’ in a large ‘sea’ of informal work. The formal sector may still account for over 50% of GDP – due to its higher relative productivity – suggesting that the benefits from a longer-term transition to a salaried economy through progressive expansion of the sector can be large” (Link).

A “salaried economy”? As one where most paid work is done by people paid a wage by an employer to do it, it’s another name for a capitalist economy since capitalism is based, precisely, on waged labour. The rickshaw drivers and shoe-shiners of Jakarta are not wage-workers. They are workers in that they work and provide a use-value, for which they are paid. But what they get from selling their service is only enough to allow them to cover the costs of being able to keep on working. They don’t produce a surplus over and above this and so don’t contribute anything towards economic development, i.e. capital accumulation.

What difference would it make if instead of selling their service directly to the customers, they were to become employees of a rickshaw or a shoe shining company? They would still be doing exactly the same work as before and getting more or less the same money. The difference is that employers are not philanthropists. They only employ someone if there’s something in it for them – if they can end up with more money than they had invested in buying the materials and hiring workers. In other words, if they made a profit on their capital.

Marx explained that the source of this profit is the unpaid labour of the employees; they not only transfer the value of their own upkeep to the product but also a further amount for which they are not paid and which belongs to the employer. This extra value is new value, most of which is accumulated as new capital. The OECD wants to turn rickshaw drivers, shoe shiners and the like in countries where informal work is currently high into salaried wage-slaves because this is what the capitalist development they favour involves. As socialists, we stand for the “Abolition of the Salaried Economy”.

Multinational’s charter (1998)

From the April 1998 issue of the Socialist Standard

For the last few years the 29 members of the Organisation of Economic Co-operation and Development (OECD) including Britain, have been secretly negotiating a Multilateral Agreement on Investment (MAI) which they hope to conlude by the end of April.

This treaty is ostensibly meant to provide a framework for international co-operation in protecting investments made by multinational and international corporations and institutions. The OECD will adopt the procedures of this treaty among its membership, which includes the most economically advanced states in the world. The plan is to extend it to all states, through pressure and the development of the idea of MAI being a hallmark of investment security. Once any state joins it will be bound to the treaty’s strictures for a minimum of twenty years (that being the time it takes to actually withdraw from the treaty).

The treaty seeks to protect international investment in two ways.

Firstly, it will forbid any member state from distinguishing between local capital and foreign capital (for instance this could forbid states from putting restrictions on media ownership by non-nationals, as is found currently in several states). This would extend towards the prevention of compulsory nationalisations and expropriations without compensation (as an example, Chancellor Brown’s windfall levy could have counted as an expropriation, which the British government would have had to compensate foreign investors for, had the treaty been in force then).

Secondly, it will for the first time give multinationals and investors rights under international law. The treaty will provide a set of provisions for punishments for infringing its strictures. Effectively this means that if a corporation does not like a law passed by a country, it can take that country to court to try to get the law changed. Of course, as usual when our corporate masters grant themselves rights, there are no corresponding duties–there is no commitment upon them to protect the welfare of their workers or the local environment.

The Green movement is mobilising to attack this treaty, on the grounds that it will damage the environment, and impede national sovereignty and restrict democracy by providing for unelected, unaccountable business elites to be able to change the laws of democratically elected governments, and by restricting the capacity of individual governments to stimulate their own economy or build a local economic base of their own. What, though, is really so new in this?

As far as socialists are concerned, states have always been in the pocket of unaccountable business cliques, and have always worked in their interest. Many of the states whose “sovereignty” will be infringed are already corrupt and toadying lackeys to our corporate masters, with despotic elites living the life of Riley out of ill-gotten plunder from environmental despoliation and pillage, wealth almost literally torn from the bodies of the world’s poor. A little more formalisation of this relationship, and a little extra protection for our masters can’t be such a bad thing, really? Can it?

This treaty is important because it means that for the first time our corporate elites are taking direct control of matters, instead of working through their state. One of the greatest threats to their own dominance of the world has been nationalist competitors, restricting their access to markets by asserting a claim to rights in a particular territory. Just look at how many wars have been fought these past fifty years by our imperial masters against nationalist upstarts: Suez, Vietnam, America’s dirty wars in South America; all in the name of keeping some particular territory within the web of international corporate capitalism. Having crushed most such opposition, all that remains for them now is to assert their authority within such territories and to lay claim to plunder of the world.

As the economic situation deteriorates, with the older capitalist states almost unable to sustain growth and the South Asian tigers suffering crises, our masters must desperately search around for new markets and sources of profit and new investment outlets. And they must seek to protect that investment, and make sure that every drop of wealth that they suck out of these areas will return to them, and not to some group of local rivals.

This treaty will strengthen the negotiating hand of multinationals against local power elites, enabling them to get even better returns on their profit than they could if they had to bribe the local rulers. It also makes it easier for them to try to force local governments to act against the workers, and write into law whatever is to the benefit of our international overlords.

As their position has become more precarious they have had to cut out any room for manoeuvre by states, and that includes the pressure release of even a moderately reform-minded government. By cutting off the route of reform in the way that this treaty does, our rulers are accentuating and revealing the truth about the class divide.

The MAI means making the strong even stronger and even more effective and efficient in the exploitation of the working class and the environment the world over. In their desperation our corporate masters are opening their greedy maw even wider, determined to swallow the world whole.

Pik Smeet

Cooking the Books: Back to Basic (2017)

The Cooking the Books column from the July 2017 issue of the Socialist Standard

In a speech at Harvard University, Facebook founder Mark Zuckerberg called for everyone to be paid a basic income by the state, whether working or not (i paper, 27 May). This was one of the Green Party’s promises in the recent general election. The ‘Parti Socialiste’ candidate in the French presidential elections, Benoît Hamon, favoured it too. As has Italian Autonomist Toni Negri.

Its various advocates offer different reasons. Zuckerberg wants to give people some free time to think up new ideas. The Green Party wants a pilot scheme to see if it would be cheaper than current income support. Hamon saw it as an answer to the fall in paying demand caused by the growing unemployment which he anticipates robotisation will bring. Negri sees it as a demand around which all critics and victims of capitalism – the employed, the unemployed, women – can unite in a way they cannot around sectional trade union demands for higher wages.

All of them envisage it being introduced within the context of the capitalist economic system of production for sale on a market with a view to profit. And that’s the rub. It is all very well proposing reforms to capitalism involving the government spending more but, since governments produce nothing, where is the money to come from? In theory the government could simply print it but that would lead to Zimbabwe or Venezuela-style inflation. It would have to come from taxes, but even taxes on wages are ultimately passed on to employers. So the money would have to come out of their profits. But profits are what make the capitalist economic system go round. Less profit means less investment. There are limits to how much a government can increase taxes without provoking an economic slowdown or downturn.

As if to answer Zuckerberg, the OECD, an intergovernmental organisation of the richest capitalist countries, published at the same time a study of the effect of introducing a basic income in four countries (Britain, France, Italy and Finland) on the assumption that taxes are not increased and that the amount of cash payments currently going to all those below retirement age were evenly divided among them.

The OECD concluded that the basic income that everyone would receive would be well below the poverty line (as the minimum to which governments at the moment guarantee to make up the income of the poor) in each of the four countries. It added: ‘Any basic income at “a socially and politically meaningful level” would require additional spending on benefits and therefore higher taxes to finance this’ (Times, 29 May).

If everyone below retirement age was paid only a basic income equal to their country’s poverty line, the OECD found that in Italy and Finland the government would actually pay less in total on payments to those under retirement age than it now does; which means that some of them would receive a drastic cut in their payments, in particular those who have taken early retirement. So much, then, for Negri’s suggestion that UBI is a demand that could unite all victims of capitalism.

The OECD report neglected one other drawback – that a basic income paid to those in work would amount to a wage subsidy for their employers. Wages tend to gravitate around a level that is enough to enable the workers to buy the things they need to maintain their particular working skills. If the government provided them with some of the money in the form of a basic income then the employers would no longer have to; wages would tend to sink by an amount equal to the basic income.

So, all in all, not even a desirable, let alone a practicable, reform.

Cooking the Books: Labour’s Share Goes Down (2012)

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

In July, the OECD, an organisation grouping the developed capitalist countries of Europe, North America, Japan and Australasia, published its Employment Outlook 2012. Chapter 3 noted that ‘during the past three decades, the share of national income represented by wages, salaries and benefits – the labour share – has declined in nearly all OECD countries’. The Times (11 July) summarised the report:

  "Automation and computerisation are responsible for as much as 80 per cent of the decline in so-called “labour share”, which measures wages as a proportion of total income generated by the economy … The research … shows that the average labour share dropped from 66.1 per cent in the early 1990s to less than 62 per cent in the late 2000s. In all but four of the 26 OECD nations analysed, workers’ slice of their country’s income declined between 1990 and 2009.”

What the OECD was trying to measure, at national level, is what Marx would have called ‘relative wages’, i.e., the workers’ share in what they produce. This does not necessarily mean a decline too in ‘real wages’ (what wages can buy). In fact, according to the OECD, ‘in essentially all OECD countries, while the fraction of national income accruing to labour decreased, economic growth was still sufficiently rapid so that real labour compensation increased and workers were on average better off.

Since the income of the self-employed was divided between labour and capital, a decline in labour’s share meant a rise in capital’s, with the result, as the Times pointed out, that:

  ‘Corporate investors have been the big winners, as businesses save on salaries and their profits increase.’

Further, as workers became on average better off, the shift meant that ‘corporate investors’ had to have become even more better off.

The OECD’s figures have some bearing on the arguments amongst students of Marxian economics about what has caused the present economic downturn. Some say that is due to a fall in the average rate of profit; others, that it is due to the decline in labour’s share of national income. One passage in the OECD report seems to give some credence to the latter view:

  ‘… the shift of income away from labour (and, in particular, from low-wage workers) towards capital (and top earners) may have a negative impact on aggregate demand to the extent that workers with below average pay tend to have a higher consumption propensity than do top earners and capitalists.’

On the other hand, it may not, as long as the capitalists use their increased profits to increase their luxury spending and, more importantly, to re-invest in production; which in fact they did until 2008.

The OECD figures say nothing about the rate of profit since they concerned only the division of new income corresponding to new wealth and value produced in a year. The rate of profit measures total profits in relation to the total amount of capital invested. No doubt, due to ‘automation and computerisation’ that went on during the period in question, the stock of capital would also have increased. Whether it would have increased more than the increase in the amount of profits – which it would have to have done for the rate of profit to fall – is not something the OECD went into.

While capitalist firms do calculate an expected rate of return to decide when, where and whether to invest, and check whether or not this is being achieved, they will not take into account the rate of profit of the whole economy, if only because this is something they have no means of knowing.