Socialism and the so-called “middle class”. - Part 2 (1925)

From the February 1925 issue of the Socialist Standard

(Continued from January issue.)

The property holdings of the “middle class,” unlike those of the capitalist, do not free their possessors from worry, and do not give them command over the lives and destinies of other men. They represent deductions from present income for future needs; they are therefore not capital in the sense of being “wealth used for the purpose of gain” (the definition of capital used by a Conservative, Sir William Ashley), the receipt of a return on them being only incidental, and not the object of their existence. Unlike Topsy, they have not “just growed.” On the contrary, these reserves, for the future of themselves and their children, can only be accumulated by deliberate and self-denying effort. Failure to make such saving against the future is followed by a fall to a lower level of life, either in this or the succeeding generation. The effort to retain their “nest egg” occupies so large a part of their lives that it becomes the basis of the political philosophy of the more highly paid workers, and, like the bird in the Mediaeval romance, they are so busy sitting tight on their eggs so that they shall not be stolen, that they do not see they are being robbed by the opening of the nest from below. To secure their savings from “predatory Socialists” who are supposed to have raiding designs on their women and children, they hitch their wagon to capitalism. But what security does capitalism offer even for their savings ?

Savings can be held in one of the following forms—in currency or in bank balances which represent claims to a definite amount of currency, in government bonds, or in titles to property of various kinds, such as title deeds of land, shares in industrial and commercial undertakings, etc. Of the two main kinds of shares, debentures represent a claim to a fixed annual interest and the repayment of a definite sum of money. Therefore debentures, government bonds, currency holdings, and bank balances can be lumped together as being holdings of money, and it follows that the value of these holdings depends on “the value” of money. But there is no guarantee under capitalism that the value of money measured in the commodities it will purchase for its possessor will remain constant, or even that it will fluctuate only within narrow limits. Wherever there has been money economy there have been violent fluctuations. (For an example in the Ancient World, see Gibbons’ “Decline and Fall,” Chapter 11.) The recent happenings in Europe provide an instructive illustration of the lack of security in all currency holdings. In Germany the value of money has fallen to such a degree that the internal debt has been wiped out. In France pre-war holdings of Government Stock have lost seven-eighths of their real value; in Italy, eleven-twelfths; and in England, one half.

  “Throughout the Continent pre-war savings of the middle class, so far as they were invested in bonds, mortgages, or bank deposits, have been largely or entirely wiped out” (“A Tract on Monetary Reform,” J. M. Keynes, page 16).

Mr. Keynes adds : 

  “What was deemed most secure has proved least so. He who neither spent nor ‘speculated,’ who made ‘proper provision for his family,’ who sang hymns to security and observed most straightly the morals of the edified, and the respectable injunctions of the worldly-wise—he, indeed, who gave fewer pledges to Fortune, has yet suffered her heaviest visitations” (page 17). 

And this lack of security proceeds not from natural causes such as make uncertain the life of the savage—that is, famines, plagues, earthquakes, floods, etc.—but from a defect in the organisation of society based as it is on money economy. If it be argued that these fluctuations were the product of war, which is an abnormal condition, it need only be pointed out that where there is production for profit there will be struggles for markets and raw materials, and where there is a clash of interests there is an ever-present danger of war. And, moreover, price fluctuations before the war were considerable over a period of years. Here it is sufficient to note (see Keynes) that between 1896 and 1914 the capital “value of the annuity of any investor in Consols fell by about one-third, and the purchasing power of his income from them by about the same amount.” Consols are chosen as representing a class of investment free from ordinary speculative risks of trade, and therefore affording the best index to changes of the kind we are here concerned with.

There is, then, no permanent security in that class of savings which represent titles to certain sums of money. Titles to land and ordinary shares remain to be dealt with. But, first, two possible criticisms must be anticipated.

Economic Insecurity.

It may be objected that lack of security affects the capitalist as well as the small saver. It certainly does, but as all authorities admit, not nearly to the same extent. The capitalists as a class are not ruined by changes in the value of money, though some individual members may be. Their economic domination is not ended by fluctuating prices, any more than the subjection of the workers is lessened by either stable or changing prices. This is because capitalists hold goods, factories, mines, and commodities of all kinds, and not money, which is only a means to the obtaining of goods. To quote Keynes again : “Small savers have most to lose by currency depreciation” (page 66). But even if it were true that the capitalists are also insecure, this would not disprove our contention that capitalism fails to provide security for the “middle class,” and it would be additional evidence of the decay of the system.

The other objection which might be raised is that there could never be complete security under any system. This is obviously true as regards natural catastrophes like plagues, crop failures, earthquakes, etc., whose effects we can at present not guard against entirely, but it has no bearing on the kind of insecurity which is an effect of capitalism and which can be removed with capitalism.

Now let us consider titles to land. This kind of “middle class” property needs little attention, because it hardly exists. Some own their own houses, and a few own other houses as well as the one in which they live. Those that are held on lease are not a form of permanent revenue, thus only freehold house property remains, and the capital and rental values of this are by no means certain. The decay of industry in a particular neighbourhood may completely destroy the value of house property in it. Even since the war, and in spite of the Rents Restriction Acts, there have been local falls of the value of house property, and before the war fluctuation in value of house property was notorious.

As for ordinary shares, they are a type of investment not in favour with those people now under discussion. They play for safety and avoid investing in industrial shares whose fluctuations are so wide and unpredictable. Only the favoured few experienced persons “in the know” are aware of impending movements by which money can be made, and they are not members of the so-called “middle class,” whose savings, moreover, are not large enough to be widely distributed so as to minimise the risk of loss. The recent happenings in Dunlops will serve to drive home our point. Adverse trading conditions resulting in a loss of ten and a half million pounds have involved the reduction of the ordinary £1 shares to 6s. 8d. each. Yet Dunlops was regarded as one of the safest companies in that trade. Crosse and Blackwell’s, and Burberry’s, other perfectly “safe” concerns, have had to carry through similar re-organisation schemes.

There is certainly no security for small property ; is there any more security attaching to the employment of the “middle class”? The following London banks have collapsed since the war, and many of the staff are still looking for work, to be met always with the reply, even where vacancies need to be filled, younger men or boys will do:

Sir Robert McGrigors, Bart., and Sons; Hannevigs Bank Ltd. ; Alliance Bank of Simla, Ltd. ; Boulton Brothers. If it be said that these were not first-class firms, that objection cannot be raised against the Austrian Discount Bank, of Vienna, or against the Banco Disconto in Italy, or Alperin, Kisch, and Schiff, of New York—all of them first-class, old-established banks or banking companies which have recently failed. Shipping and insurance companies which have failed during the last few years and thrown thousands of men out of employment are too numerous to mention. Recall the affair of Bevan. He was a financier who gambled in a way that his kind do every day. But he was unlucky, and went to gaol, and an associated firm, the oldest-established stockbrokers in the City, was ruined. As a result, clerks of over forty years’ service found themselves suddenly out of a job.

As Mr. R. Tawney puts it (“Acquisitive Society,” page 204): The brain workers, like the manual workers, find that

  “Their tenure of their posts is sometimes highly insecure. Their opportunities for promotion may be few and distributed with a singular capriciousness. They see the prizes of industry awarded by favouritism, or by the nepotism which results in the head of a business unloading upon it a family of sons whom it would be economical to pay to keep out of it, and which, indignantly denounced on the rare occasions on which it occurs in the public service, is so much the rule in private industry that no one even questions its propriety.”

Enough has been written to show that there is no section of the working class without its problem of unemployment, and that the problem is the same for the whole class without distinction of sex or colour of skin or working coat. The problem, moreover, is not one of mere numbers. To reduce the number, as the Labour Party and other capitalist quacks seek to do, does not solve the problem. It is an effect of the social system that it cannot provide its members with the opportunity to labour in support of themselves. The only guarantee the present system gives is that certain privileged members shall be able to live in sumptuous idleness on the backs of their fellows. They do this by exploiting those they employ, and the latter, if alive to their own interest, would end the system which is based on exploitation.

The Inefficiency of Capitalism.

If the “middle class” are more foolish than the so-called manual workers, and instead of looking at social problems from the point of view of their own self-interest they wish to measure everything according to the standards set by the ruling class, they must still condemn the present system because it is grossly inefficient.

Is it efficient to have millions of workers seeking employment while the machinery of production is standing idle? Is it efficient to put checks on Nature because she yields too generously of her bounty? And yet this is what happens in the production of rubber, tea, jute, etc. Is it efficient to have trawlers dumping cargoes of fish into the sea in order to keep prices up? Is it efficient to fatten and pamper a select and useless few while half the people are on the verge of starvation? Is it efficient to be doing jobs which are not necessary for the ordering and use of society? Yet nearly the whole of the clerical profession are thus occupied. What need of insurance clerks in a world where risks are borne by society instead of by a special section with a view to making a profit. Solicitors’ clerks, what need of them except to haggle over private property? Abolish money economy, and what a reserve labour is made available for production from the ranks of the bank staffs. Whichever way you look at it, this system is rotten, inefficient, and destructive of the best potentialities in man. Social progress demands its overthrow, a task which only the working class can perform. The workers alone can break the chains that bind them, and replace a class system based on production for profit by a classless system producing for use. Chains are still chains though they are gilded, and the “middle class” being in reality merely a section of the workers, must join with the rest of their class in breaking those chains.

A. L. T.

(Conclusion.)

Blogger's Note:

'A.L.T.' could have been Albert L. Torr, who joined the Manchester Branch of the SPGB in October 1916 (alongside a William Torr). It makes sense that a bank clerk,  a 'brain-worker', would seek the anonymity of a pen-name in the pages of the Socialist Standard.

The capitalist principles of the I.L.P. (1925)

From the January 1925 issue of the Socialist Standard

It is common enough to hear the I.L.P. and the Labour Party attacked and defended on the ground that they are Socialist parties. Yet we find leading members of the I.L.P. affirming that the Labour Party is not really socialist, and members of the Labour Party agreeing with them. Indeed, if the members of the I.L.P. considered the Labour Party a Socialist party they could not very well justify retaining their own separate organisation claiming to be socialist, too. Then, again, the Socialist Party of Great Britain opposes both of these parties and maintains that they are anti-socialist.

It cannot fail to be confusing to the enquirer about Socialism to witness this disagreement between those who are all apparently socialists, and an attempt is usually made to dismiss the disagreement as a question not of principles but of policy and method, and of only minor importance. “We are all,” they say, “bound for the same place, but we travel by different roads.” Yet this explanation is not by any means true, for our opposition is not concerned merely with method, but is one of basic principle. We have to reject offers to sink our differences and join forces because we travel by a different road to a different place. The success of the I.L.P. would mean defeat for us, and we can get what we want only after defeating them.

If there exists this clash of aims no good purpose is served by minimising it, or ignoring it; hence our assertion that the I.L.P. is not deserving of working-class support. We must, however, not attach undue importance to mere names. We cannot prevent our opponents from calling their politics “Socialism” however much they differ from own own. The importance lies not in the name but in the thing, what it is and what it does for the workers, not what it is called. The Socialist Party and the I.L.P. both come before you to tell you the cause and the remedy for your poverty and insecurity. What we want you to notice is that their explanations and their remedies differ from ours as chalk does from cheese, in spite of an apparent similarity in the use of words. There are people who think that the I.L.P. and the Socialist Party are both wrong, but what you ought to avoid at all costs is thinking that we can both be right. If we are right, then the I.L.P. are wrong and vice versa. We ask you to examine our principles and choose between us.

To make clear why the Socialist Party takes up this uncompromising attitude, let us examine the case it presents.

We live in a system of society which by general agreement is known as Capitalism, and whose outstanding features are private property and wage-earning. A certain few fortunate individuals are the owners of the land, the railways, factories and other means of production, and the non-owners have to work for a wage or a salary in the service of the owners of property. Society is divided into a class of workers who must work to live, and a class of capitalists who can live without working. We know from everyday experience that there is no wealth without work, yet the workers are poor and the non-workers are rich. The Socialist says that the poverty of the poor and the riches of the wealthy are the results of the system of private property, and the only remedy is its abolition. We do not condemn the Capitalists as “wicked” because they live by exploiting the workers, but we do regard private property as no longer necessary to society. We shall, therefore, deprive them of their property. Whatever services the Capitalists may have rendered in the early days of their system in directing industry and as the medium through which accumulations of capital were made, they render needful services no longer. Society can manage now without them, but they still continue to levy tribute on production to which they make no active contribution. It is now a quite normal Capitalist practice for the property owner to be, in fact and in the eyes of the law, a passive investor without knowledge of the industry or the right to share in the management. Occupying this position it is possible for the wealthy to live in luxury and yet grow continually wealthier. The Capitalist is, moreover, interested in production only from the point of view of the dividend-receiver. There is hardly an industry in which more or less complete combination does not exist, and an admitted object of combination is to control and limit production in the interest of the shareholder. We even have associations of employers providing individual firms with an annual grant conditional on their loyally refraining from producing anything.

Socialism will terminate once and for all the right of any individual to receive rents, profits, or interest by virtue of being an owner of property. THE ONLY JUSTIFICATION for a claim on the produce of industry for able-bodied persons will be that they give personal service. Work, and work alone, will entitle any fit man to consume the wealth which work alone produces. That is the Socialist aim, but it is not the aim of the I.L.P. Their slogan is not the abolition, but the stabilisation of profit and interest.

They endorse and wish to extend the movement in Capitalism towards removing from the hand of the Capitalist whatever active control of industry there is left to him, thus making him simply a passive owner receiving interest by right of ownership. They wish to hasten the Capitalist tendency towards nationalisation, and propose to give the Capitalist Government Bonds which will guarantee to him a secure and regular income without risk of loss, and without the right to share directly in administration, at the same time saving him the expense and trouble of dealing with the discontent of the workers. The I.L.P. does not attack the rights of capital; it defends them and holds out hopes of adding to their value. In the fight between the Socialist and the defenders of Capitalism, it stands on the side of property.

Thus, in “Socialism, Critical and Constructive,” in chapter 7, which is headed, “Socialist Society,” Mr. J. R. MacDonald writes :—

  “When Labour uses Capital and pays it its market value, property is defensible, when Capital uses Labour and retains …. the maximum share in the product upon which it can keep its grip, property is devoid of a sure defence.” (Page 274).

In “How Socialists would run Industry” (I.L.P. Programme Pamphlet, Number 5, 1924) a footnote on page 14 asks :

  “Why should not Labour hire Capital and devote the whole of the surplus to the improvement of the service?”

and again :

  “… the surplus earnings after paying a fixed rate of interest for the hire of loan capital, should …. be reserved for specific purposes. …”

In “Socialism in the Village” (I.L.P., 1920) we read :

  “The owners will receive Government Bonds in return for their land, the interest on which will be more than covered by the rents paid to the State” (page 5),

and (page 7) :

  “There is every reason to expect that agriculture under public management will yield a far better return on labour and capital than it now does.”

A prominent member of the I.L.P. is Mr. J. Wheatley, himself the owner of considerable property, and ex-Minister of Health. In a recent speech reported in the Daily Herald (20th November) he declared that

  “The only hope of saving us from catastrophe lies in a certain number of influential Capitalists recognising that Capitalism itself is becoming the greatest menace to their capital. Nationalisation is likely to prove the only way to salvation.”

He goes on to elaborate his proposals and adds :

  “It could be effected without making the Capitalists poorer, or lowering their standard of life.”

In a pamphlet, “The Catholic Working Man,” a publication of the “Catholic Socialist Society” (1909) which declares its “hearty agreement” with the I.L.P., Mr. Wheatley expressly clears himself from the charge of being a Socialist in the sense understood by the Socialist Party. He remarks that his political creed “differs from the Socialism condemned by the Pope in that it retains the right to own private property” (page 22) and he assures his critics that nationalisation will show “due consideration of vested rights.”

When we remember that of the Labour M.P.s in the last House of Commons well over half were members of the I.L.P., we see in their support of the policies of the Labour Government further evidence of their anti-socialism. Mr. Wheatley introducing his Housing Bill declared in reply to an interruption, that

 “The proposals which I am submitting are real Capitalism —an attempt to patch up in the interests of humanity, a Capitalist ordered society.” (See “Houses to Let,” page 8. A verbatim report published by the T.U.C. and the Labour Party.)

He again made his position clear in a speech at Glasgow on Sunday, November 2nd, when he commented on the election results,

  “My own view of the return of the Tories in such an overwhelming majority is that it will considerably hasten the end of the Capitalist system of society. . . . Had the Labour Government been allowed to proceed it would have produced a greater amount of content among the toiling multitude, and it would have established Capitalism longer than it is likely to exist now.” (“Times”, November 3rd.)

The Socialist does not, of course, believe that it is possible to improve materially the workers’ position inside Capitalism, nor that the return of a Conservative majority will hasten the progress to Socialism, but of the deadly work done by the Labour Party and the I.L.P in making the workers contented with the private property system there can be no doubt.

Another prominent member of the I.L.P. is Mr. R. H. Tawney, author of “The Acquisitive Society.” On pages 66 and 177, after condemning various forms of property, he argues that the payment of “pure interest” will be necessary under what he calls “Socialism.” It is justified, he says, provided the owner of the capital is not allowed to have any share in, or responsibility for, the organisation of industry.

We see, then, that the view generally held by the I.L.P. members is that poverty can be removed without the abolition of private property in the means of production; while the Socialist Party demands, as the only solution, the extinction of all property claims whatever their name and form.

Were it not for the repeated refusal of the I.L.P. to defend its principles on the public platform against the criticism of the Socialist, the question might usefully have been thrashed out in debate.

Edgar Hardcastle

Cooking the Books: Islamic Bankers (2005)

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

One of the measures announced in Gordon Brown’s pre-election budget was a concession to Islamic banks.

“Under Islamic law”, explained the Times (17 March), “the receipt and payment of interest is forbidden, so Sharia products are structured differently. Islamic deposit accounts are operated on a profit-sharing arrangement, under which the bank invests customers’ money in Sharia compliant investments and then shares profits with customers”.

This meant that the money received by depositors was taxed as a dividend. Gordon Brown’s concession consists in treating it from now on, for tax purposes, as interest.

The Christian Church, too, once used to condemn interest. Or rather, it condemned usury since the word “interest” derives from the Mediaeval Latin word “interesse” which was one of the ways round the ban: “interesse” was the compensation that could be charged if the money lent was not repaid on time.

R. H. Tawney, in his book Religion and the Rise of Capitalism, explained that what was condemned was “that which appears in modern economic text-books as ‘pure interest’ – interest as a fixed payment stipulated in advance for a loan of money or wares without risk to the lender . . . The essence of usury was that it was certain, and that, whether the borrower gained or lost, the usurer took his pound of flesh”.

This is exactly the position preached by backward Islamic clerics today, as is one of the get-out clauses: No man in mediaeval times, wrote Tawney, “may charge money for a loan. He may of course take the profits of partnership, provided that he takes the partner’s risks”.

It is on this basis that Islamic banks operate. They pay depositors a share in the profits made from investing the money deposited. But, economically speaking, that is what the interest paid by non-Islamic banks to their depositors largely is anyway. Under capitalist conditions, “interest is simply a part of profit”, as Marx showed in Volume III of Capital (the beginning of chapter 22). What else could be the source of the money to pay interest on investments than the surplus value produced in the profit-seeking section of the economy?

Islamic law is quite compatible with capitalism as it does not condemn making profits, only sharing them in the form of fixed payments. It only objects to bondholders not shareholders.

Islam and banking (1979)

From the December 1979 issue of the Socialist Standard

The Koran—which is supposed to be the literal word of God as dictated to Mohamet by the Archangel Gabriel — bans the taking of interest. Or at least that is how it is being interpreted by the Ayatollah Khomeini in Persia and by the Moslem fundamentalists who advise the military dictator of Pakistan, General Zia.

The trick of course is in the definition of interest. It can be admitted that, from the point of view of economic theory, there are two kinds of interest, depending on what the loan is granted for: consumption or production. Before capitalism most loans were not investments in production but were to people to spend on consumption, the luxuries of the rich or the necessities of the poor as the case may be. When such loans are made to the poor the moneylender can exploit his client’s dire need to extract a very high rate of interest and can eventually reduce him to a state of virtual slavery, as occurred on numerous occasions in pre-capitalist times. Mohamet wrote the Koran, of course, well before capitalism evolved, about 1300 years ago in what is now Saudi Arabia and its ban on interest was designed to prevent the social structure of the then tribal society being undermined by debt-slavery.

Interest under capitalism is something different. It is a share in the profits extracted from the exploitation of wage-labour. The lender loans his money to an entrepreneur who invests it in production and who pays the interest out of the profits he makes. This means that under capitalism there is a limit to the rate of interest: it cannot be greater than the rate of profit.

Banks are specialised financial institutions which gather together money which people want to lend and pass it on to capitalists to invest in production. They realise their profits out of the difference between the rates of interest they pay their depositors and the rates of interest they charge their customers. Banks play an important intermediary role under capitalism and without them the accumulation of capital out of profits — which is the be-all and end-all of capitalism — would proceed, and would have proceeded, at a much slower pace.

Capitalism has only been going for about two hundred or so years but it has now spread all over the world, including Moslem countries. In such countries too it finds banks essential as financial intermediaries channelling money for productive investment; and of course banks, charging and taking interest, exist in all Moslem countries including both Khomeini’s Persia and Zia's Pakistan.

Moslem theologians have overcome this problem by interpreting the Koran’s ban on interest to apply only to the taking and paying of amounts of interest fixed in advance. From here on it is easy: the interest, both that paid to depositors and that charged to borrowers, comes to be called “a share in profits”. This is how the Amman correspondent of the Financial Times (21/3/79) describes the operation of the Jordan Islamic Bank:

  A depositor places his money in a savings account in an Islamic bank without being guaranteed any fixed return every year. Instead he is promised a share of the profits of the projects the bank is financing. When the bank lends money to finance a new industrial plant, the borrower does not pay a fixed interest rate every year, but rather promises to give the bank a share of the profits the plant generates after it starts production. If the plant makes a quick and large profit, the bank and the depositors share in the bonanza. If the plant makes only a small profit, they get less. The bank always maintains a reserve fund from which it will pay its depositors and shareholders a dividend during any particularly unprofitable years.

Another way out is, instead of demanding a share of the borrower’s profits, to charge him a “commission” or “fee” for arranging the loan.

Actually, this solution — of calling “interest” a “share in profits”— conforms very well with the nature of interest under capitalism which, as we saw, is precisely a share of profits — though it is another matter whether the foregoing of the administrative convenience of paying fixed interest just to respect the letter of the Koran is a rational banking practice.

What is interesting in this is the confirmation it brings of the materialist conception of history that the ideology of a particular society its morality, its religion,—is a reflection of its economic basis and changes as that basis does. As capitalism has come to Moslem countries so the Koran's ban on interest has been re-interpreted so as to fit in with the system's need for the financial intermediaries that are banks.

There is a precedent for this. The Bible too used to ban interest and this had to be changed when capitalism evolved in Christian countries. It seems, according to R.H.Tawney in his Religion and the Rise of Capitalism, that by the end of the Middle Ages the Christian theologians had reached exactly the same conclusions as today’s Moslem theologians — that anything goes except the giving and taking of payments fixed in advance (indeed there would seem to be one or two subtleties here that may not yet have occurred to the Ayatollah Khomeini):

   No man, again, may charge money for a loan. He may, of course, take the profits of partnership, provided that he takes the partner’s risks. He may buy a rent-charge; for the fruits of the earth are produced by nature, not wrung from man. He may demand compensation — interesse — if he is not repaid the principal at a time stipulated. He may ask payment corresponding to any loss he incurs or gain he foregoes. He may purchase an annuity, for the payment is contingent and speculative, not certain . . .What remained to the end unlawful was that which appears in modern economic text-books as ‘pure interest’ — interest as a fixed payment stipulated in advance for a loan of money or wares without risk to the lender. . .The essence of usury was that it was certain, and that, whether the borrower gained or lost, the usurer took his pound of flesh. Medieval opinion, which has no objection to rent or profits, provided that they are reasonable — for is not everyone in a small way a profit-maker? — has no mercy for the debenture holder. His crime is that he takes a payment for money which is fixed and certain, and such a payment is usury. (Pelican edition, pp 54-5).

How long will it be before the Archangel Gabriel appears again to dictate an amendment to the Koran permitting fixed interest payments?

Adam Buick

Getting it made (1985)

From the July 1985 issue of the Socialist Standard

Thump. The morning post drops on the doormat. Over breakfast I begin my inspection. A glossy mail order catalogue. Another invitation to play bingo in "your super Sun". A second reminder about the electricity bill. And then — a brochure glowingly advertising a book that could revolutionise my whole way of life. Intrigued. I read on, a spoonful of cornflakes posed in mid-air.

The book is called The Science of Getting Rich, modestly described as the "single best source book ever written on the subject", but curiously "not available in bookstores". It is intended for those "whose most pressing need is for money — who wish to get rich first and philosophise afterwards" — presumably the sort of person not prone to frequenting bookstores.

How to get rich, the brochure tells me. is the "noblest and most necessary of all studies":

 Whatever may be said in praise of poverty, the fact remains that it is not possible to live a really complete or successful life unless one is rich. We develop in mind, soul and body by making use of things and society is so organised that we must have money in order to possess things.

At last, good news for those of us accustomed to fretting over electricity bills — we need not philosophically resign ourselves to poverty much longer:

  There is a Science of Getting Rich and it is an exact science like algebra or arithmetic. There are certain laws which govern the process of acquiring riches. Once these laws are learned and obeyed by anyone, he will get rich with mathematical certainty.
  Many people will scoff at the idea that there is an exact Science at Getting Rich. Holding the impression that the supply of wealth is limited. they will insist that social and governmental institutions must be changed before considerable numbers of people can acquire wealth. This is not true. Existing governments keep the masses in poverty only because the average person does not act in a Certain Way.

In 1980. according to the Inland Revenue. the richest one per cent of the population owned 23 per cent of the total marketable wealth in Britain, which amounted to £566,000 million. The poorest 50 per cent, on the other hand, owned less than six per cent of this wealth. Translating these figures into pounds and pence, the average person among the richest one per cent of the population held £315,000 in private wealth while the average for the poorest half of the population works out at roughly £1,600 each. In fact, this probably understates the degree of wealth concentration because of the greater ease with which the wealthy can withhold information about their assets for taxation purposes.

Is there any indication that this marked inequality is becoming less so in the long run? In his famous work, Equality, first published in 1931, the historian R.H. Tawney wrote trenchantly of the tremendous inequalities that existed then in Britain. But by the time the fourth edition of his book appeared in 1952, Tawney had come to the view that under the post-war Labour government there had been a discernible move "towards the conversion of a class-ridden society into a community in fact as well as name". The subsequent three decades were cruelly to expose this for the wishful thinking it was.

While the share of the marketable wealth held by the richest one per cent has indeed plunged dramatically from 60 per cent in 1923 to 47 per cent in 1950 to its present level of 23 per cent, this has not been reflected in any significant increase in the proportion of wealth held by the great majority. Instead, as A. B. Atkinson has pointed out in his Unequal Shares, "what distribution there has been is not between the rich and the poor but between the rich and the rich", with the lesser rich gaining in relative terms. The bottom 80 per cent of the population still own less of the total wealth than the richest one per cent.

As for Denis Healey's boast that he would "squeeze the rich until the pips squeaked", that richest one per cent actually increased its share of the wealth in the first few years of the last Labour government. In contrast, the share of the wealth held by the poorest 50 per cent marginally declined between 1974 and 1980 (Guardian, 18 March 1984). Apparently, "it happens quite regularly that the rich get richer under Labour governments and poorer under Tory governments because of the strong influence of house and share prices" (Guardian, 18 October 1983). Clearly, in the politics of the market-place, egalitarian sentiments count for little.

But what about the claim made in the brochure? Is it realistic still to hope, in the face of this chronic inequality, that "considerable numbers of people can acquire wealth"? Before examining why this is simply not possible, we need to dispose of one or two false arguments.

The first is that however unequal our society is today we are all of us, better off than our grandparents were. We eat better, live longer, travel far more widely and even the poorest have access to the sort of technology undreamed of by our forebears. Broadly speaking this is quite true, although there is a danger here in confining our observations along too parochial lines. Taking a wider perspective this argument is by no means as clear cut and convincing as it may seem. Certainly in some parts of the world, especially in sub-Saharan Africa, it is highly questionable whether in absolute terms the majority are better off than they were, say, two or three decades ago. Per capita food production in sub-Saharan Africa has fallen continuously and, irrespective of drought, by no less than 20 per cent in as many years as subsistence farmers have found themselves increasingly squeezed by commercial pressures.

But in any case the argument itself is not relevant to the central issue at stake. This is how Marx saw it:

  A house may be large or small; as long as the surrounding houses are equally small it satisfies all demands for a dwelling. But let a palace arise beside the little house, and it shrinks from a little house to a hut. The little house shows now that its owner has only very slight or no demands to make; and however high it may shoot up in the course of civilisation, if the neighbouring palace grows an equal or even greater extent, the occupant of the relatively small house will feel more and more uncomfortable. dissatisfied and cramped within its four walls.
  A noticeable increase in wages presupposes a rapid growth of productive capital. The rapid growth of productive capital brings about an equally rapid growth of wealth, luxury, social wants, social enjoyments. Thus, although the enjoyments of the worker have risen the social satisfaction that they give has fallen in comparison with the increased enjoyments of the capitalist, which are inaccessible to the worker, in comparison with the state of development of society in general. Our desires and pleasures spring from society; we measure them by society and not by the objects which serve for their satisfaction. Because they are of a social nature, they are of a relative nature. (Wage Labour and Capital)

A second is the myth of the "self-made man". The presumption is that if one person has been able to rise from rags to riches, then so too can others. All they lack is the necessary drive and initiative. It must be said firstly that the so-called self made man is something of a rarity, an exception to the rule that wealth, by and large, gravitates to those who already have it;

  Research by historians does show that the rich are not, on the whole, self-made men like, say, the publishers. Robert Maxwell, or the computer tycoon. Sir Clive Sinclair.
  This has been demonstrated by Professor C D Harbury. who compared the wills of men leaving large sums in selected years from the 1950s to the 1970s with those of their fathers, traced through probate and birth registration records at Somerset House. Harbury found that 60 per cent of men leaving £100,000 or more since the 1950s had rich fathers. And some three quarters of these had fathers whose fortunes were ten times the amount that would have included them amongst the richest 10 per cent of the population.

(New Society, 6 October 1983)

The millionaire Malcolm Forbes, when asked how he came to be so rich replied that it was all due to "sheer industry and ability — you spell those words i-n-h-e-r-i-t- a-n-c-e". The case of one Gerald Grosvenor illustrates this particularly well. Otherwise known as the sixth Duke of Westminster. Grosvenor is reputedly the richest man in Britain with a personal fortune estimated as "somewhere between £1,000 and £2,000 million" (Sunday Mirror, 9 January 1983). This stupendous wealth derives chiefly from extensive landholdings both in this country and abroad. Contrary to what the more politically crass defenders of the status quo would suggest, it is not "superior intellect" or some other such personal attribute that has enabled the duke to amass this wealth. If anything, by the standards which these defenders would judge "intellect", Grosvenor rates as a nondescript — he has two O levels to his name. Where he differs from his intellectual peers is in having had the right ancestors:

  Unwitting founder of the fortune was Mary Davies, who in 1677 married Sir Thomas Grosvenor and brought with her as dowry some damp and sub standard farmland. It is unlikely that the recipients thought much of this until the expansion of London made that land valuable. Mary Davies' marsh land is now 300 acres of swishest London covering Mayfair and Belgravia.

(New Internationalist, July 1984)

But whether the fortunes of the rich are inherited, or acquired within their lifetime, is really beside the point. What matters is the source of that wealth. To understand why the rich are rich is to understand why the poor are poor. The plain fact of the matter, as the American social scientist Michael Parenti points out. is that "Hard work seldom makes anyone rich . . .  the secret to wealth is to have others work hard for you". He might have added that the secret to getting others to work hard for you is to ensure that they have no alternative. In short, to ensure that they remain in a state of relative poverty.

In the more forthright language of marxism. present-day society is fundamentally split into classes. The division between rich and poor does not simply reflect a disparity in the amount of wealth at a person's disposal. In a more important sense it reflects a difference in their economic relationship to the means of wealth production. The rich are rich because they possess capital — that is, wealth that is used to produce more wealth. The small minority of the population who provide the bulk of the capital invested in industry (the richest 3.2 per cent of the population in Britain account for 84 per cent of all listed shares) — in other words, effectively own and control the means of wealth production — are called the capitalist class. If rich individuals did not utilise some of their wealth as capital they would sooner or later sink into a state of poverty depending on the size of their fortune and the rate at which it was consumed.

The poor, on the other hand, possess little or no capital to speak of. As a result they are effectively divorced from ownership and control of the means of wealth production and are compelled to sell their working abilities to the capitalist class in return for a wage or salary — the cost of maintaining themselves in reasonable working order. This great majority of the population — called the working class — produces all the wealth in society. The value of this wealth, however, far exceeds the value of the wages and salaries the working class receives — the difference between these two values being known as surplus value.

Here in fact is the source of the wealth of the capitalists. Some of this wealth is consumed in a conspicuously affluent lifestyle; some of it is reinvested as capital, perpetuating the economic stranglehold of the capitalist class over the lives of the great majority. At any point in time it is in the interests of the capitalists that the amount of profit accruing to them should be as large as possible, while competition between capitalists makes doubly certain that they pursue their interests by bankrupting those who do not. The drive to maximise profits is expressed as a constant tendency to depress wages and salaries, for the relationship between them, as Marx pointed out, is antagonistic:

 What, then, is the general law which determines the rise and fall of wages and profit in their reciprocal relation? They stand in inverse ratio to each other. Capital's share, profit, rises in the same proportion as labour's share, wages, falls, and vice versa. Profit rises to the extent that wages fall: it falls to the extent that wages rise.

(Wage Labour and Capital)

At the very heart of capitalism is a self-regulating process that works to ensure that the way is firmly blocked for "considerable numbers of people" becoming rich in a relative sense. This is why Thatcher was, for once, quite correct to assert in a famous speech she made in 1975 that "the pursuit of equality is a mirage" In her opinion, "what is more desirable and practicable than the pursuit of equality is the pursuit of equality of opportunity". Just how the pursuit of equality of opportunity is at all "practicable" in an unequal society in which the opportunities expand in proportion to the wealth at one's disposal, she did not explain. But if the pursuit of equality is a mirage in capitalism it is because it simply focusses on the pattern of wealth distribution. It overlooks the underlying economic relationships that inevitably generate that pattern.

Some have argued that the answer lies in the nationalisation of industry because "public ownership" must pave the way for greater equality. Practical experience tells a very different story. The following excerpt from a statement (reproduced in the Observer, 16 August 1981) by Mykola Pohyba, who was imprisoned for campaigning for workers' rights in a country in which industry is largely in the hands of the state, needs no elaboration:

  As a worker relegated to the lowest rung of the Soviet social ladder, I personally have experienced economic, socio-political and national oppression. Understandably, I could not help but give thought to and consider the real reasons for this oppression With time I realised that my fellow workers were also victims of exploitation and that this exploitation was greater the lower one found oneself on the social ladder.
  I came to the conclusion that ultimately it is the state which is the exploiter along with the State-party bourgeoisie which is in its service and which is the one wielding the real power in the country. The socialism and internationalism of which one so often speaks in the Soviet Union is nothing more than a smokescreen for a means of production and distribution of material goods which is not in the least socialist.
  In short, I have come to the conclusion that our country is actually a State capitalist society with a totalitarian form of government.
  In informal conversations with fellow workers, I expressed some of my views regarding Soviet reality. I saw nothing wrong in doing so. Specifically, I noted that the real causes for our impoverished condition are to be found not in mistakes committed by the administrative apparatus but in the very system of production which, in actual fact, is capitalist. 

There are those who say that socialism is about the "politics of envy". The views of an Australian multi-millionaire, Lang Hancock, say all that needs to be said about that:

  Riches to more riches is the story: wealthy pastoralist finds mountains of ore. Hancock may not be free with his money but he showers the nation with advice and his own brand of "philosophy". He was the original owner of Whitenoom asbestos mine which has been linked to more than 200 asbestos disease cases, including 45 deaths: "Some people have to suffer so that the majority can benefit from asbestos". He declines to contribute to a trust set up to help victims: "I believe I have saved millions of lives by producing asbestos".
  He is aware, however, of the problems facing "half-caste" aborigines and suggests a solution: ". . . dope the water up so they were sterile and breed themselves out" thus "curing people who are in a miserable situation to stop them bringing more unfortunate people into their misery".
  He is for . . . a White Australia policy and for the Ludwigs and Henry Fords: they create jobs for millions "but from the point of view of contributing something to the general welfare of the human race, well the average run-of- the-mill bloke would not make much difference if he were on the earth or not, would he?

(New Internationalist, July 1984) 

Socialism is about the politics of indignation. Were it not, it would be hardly worth the name. The disgusting conceit of a parasite like Hancock who owes all his wealth to the very class of people he contemptuously maligns, is not important in itself. Its significance lies in the fact that it consciously reflects the very nature of a social system that adds insult to injury as it legally robs the useful majority of the fruits of its labour. To describe socialism as the politics of envy is cynically to obscure this reality. It is to overlook what socialism is actually about.

Socialism is not about the ceaseless pursuit of more commodities on a treadmill of keeping-up-with-Joneses. It is not about levelling down the rich so that the living standards of the poor might rise. It is about a fundamental change in social relationships that will make the very concept of the "standard of living" superfluous. It is about a new type of society in which the "politics of envy" will be a meaningless term from a bygone age; an age which judged a person's worth by the amount of wealth they could command yet hypocritically condemned as "envious" those who wished for a world that would conform to their material self interest.

Robin Cox

The Post-War World (1943)

From the February 1943 issue of the Socialist Standard

What will be the character of the world after this war? Few will want to return to the pre-war world. Most people will have experienced many changes in their normal life even in the present generation. Have a conversation with anyone yon like, ask them if they remember the horse-drawn trams; would they like to return to those days? They would answer No. Yet although many recognise that changes occur, they are rather perplexed as to the future, and what will happen next. At the moment there seem to be two schools of thought, one embodied in the Beveridge plan to unify social insurance and the plan of the Federation of British Industries on Reconstruction, and the other to unify the world or to federate. One is to reconstruct conditions inside the country, the other outside.

In a pamphlet by R. H. Tawney, "Why Britain Fights," he pertinently says, "Nothing does more than insecurity to embitter life for large numbers of our fellow citizens. We have acquiesced with astonishing callousness in the destruction of others by unemployment. When they have saved the nation in the field and the factory, to what are they to return? More of the same kind of thing?"

There is, however, no indication that our rulers can cure unemployment. The capitalist employs a man for the purpose of producing a profit. If he can make no profit, he will not hire the worker, but will fire him, and so the unemployed army is created and will number millions, as our experience has shown us prior to the war.

The Socialist way is to cure unemployment by socialising the machines and factories so that no man can be hired or fired by a capitalist owner, who now is solely concerned with a profit. Under Socialism, there would be no private owner to dictate to labour, and as a corollary there would he no profit. A man would have the right to work and the right to live. There would be no inequality of income, no money required to buy goods, and the wealth produced would be freely consumed by its creators, that is, the entire population.

Our rulers have many conflicting plans to deal with this country after the war, but in the main they visualise a capitalist world, and look to the State to help them financially in their hour of need.

They are keenly concerned to recapture the export markets as may be seen in the Reconstruction report of the Federation of British Industries.

Our masters will reconstruct this country, but will most certainly not introduce Socialism. One cannot expect them to do so, to liquidate their source of privilege and power. Only the workers, conscious of their class, Socialist conscious, could do this. So the question at the moment still remains: To what are they to return? The answer of our rulers is a return to capitalism.

Professor Tawney visualised a super-national authority after the war. He says: "If it has force, i.e., a superior force, war, as we know it to-day, can be stopped. If it has not, war will continue. There is no middle course." This force will be wielded presumably by the victorious allies, U.S.A., Great Britain, the U.S.S.R. and China.

He points out that there were some 16 sovereign states, exclusive of Russia, in 1875, and some 22 in 1914. By 1920, 29 such states were packed into an area smaller than that of the American Union. He asks: Shall we add yet one more suicidal nationalism to those already rampant? He says that the national state was a constructive economic force in the past; when, as to-day, the productive energies have outgrown the limits set by national frontiers, it has become an obstructive force.

It will be interesting to see how this will work out. The world would still be based upon competition, and the struggle for markets must inevitably result in a struggle with armed force among the leading capitalist rival powers. It took only a few years for Germany to re-arm and become a formidable military power. Is it possible to retain capitalism and avoid its consequences in wars, or unemployment for the surplus unemployed army of labour? These are the problems which will confront our rulers after the war.

They are seriously perturbed about the future. In the publication of the Carnegie Endowment for International Peace, "International Conciliation." for April, 1942, one writer frankly says that "Free enterprise could hardly survive a post-war economic collapse, nor could free political institutions either."

So that the world after the war will have grave economic problems for our rulers and the workers are by no means sure of having a better world than the pre-war one.

The contradictions of capitalism which have produced two wars in one generation and mass unemployment, can be remedied, but not by our rulers. The workers alone have the power to change the world, provided they understand and apply the Socialist remedy, i.e., of expropriating the machines and factories from their masters and making them into social property.

I. F.

Letter: Blind faith in the broad church (1984)

Letter to the Editors from the July 1984 issue of the Socialist Standard

Dear Comrades,

I am writing to you with regard to your opinions of the bankruptcy of the Labour Party as an organisation for radical change, and in particular of the articles "Crisis of the Left" (July) and “Labour in Pain” (August).

The choice before Labour is three-fold: Wilsonian pragmatism, with frontal attacks on working people, the welfare state and unions, all to retain power; revisionist radicalism, primarily attempting to reconcile Labour voters with socialism, not impose it on them; and fundamentalism, not diluting or changing our policies one bit. We have to be realistic in listening to voters' hopes, radical in articulating an alternative system to capitalism’s horrors, and resolute in meaning what we say and making people realise that we will not be blown off by capital, as in 1931, 1948. 1967 and 1976. A little bit of socialism time and time again is better than nothing, and is surely worthwhile in helping radical politics.

May I remind you that in the 1983 general election. Labour on a left reformist programme got 8½ million votes, the SPGB 85 votes, a slight difference. If the dirigisme socialism of Labour, blunted and mellowed by internal contradictions and compromises, is too extreme for voters, they aren't going to vote for a revolutionary Marxist party. Are they? Why not pause and think here; what makes you so sure that eventually the workers will turn to full-blooded socialism?

Ken Coates, in his excellent Socialists and the Labour Party (1973) asks many important questions to revolutionaries which have not been answered by you or theorists such as Miliband, Panitch and David Coates. In Coates' pamphlet, he states the obvious truism that any revolutionary mass party must duplicate “the best features of the old Labour Party . . ." This is for the reason that such a party must draw heavily on former Labour activists, who are at the moment consciously influencing Labour in a socialist direction. The revolutionary left misses the fact that Labour is a living, changing organism, not a monolithic block, and is very susceptible to rank and file activism.

Coates also commented:

Since the collapse of the Independent Labour Party, there has been no group of socialists capable of maintaining a full-scale political presence outside the Labour Party . . . (by which) . . . I mean the ability to secure the election of at least a handful of members of Parliament. . .

So far the history of modern British socialism has involved any group existing outside or independently of Labour and, thus the trade union movement, withering away; no matter whether it was a new revolutionary group as with the Socialist League, SPGB, CPGB. IMG or SWP. or a breakaway from the party—the SDF, ILP. National Labour (the MacDonaldites). Democratic Labour (the Tavernites) and the Scottish Labour Party. Labour, despite the disaster of the last election and its recent record of government, is the only credible representative of the progressive working class. The lessons of the 1880s, 1930s and 1960s, periods of radicalism, must be that the only feasible road to socialism in this country is through the Labour Party.

In “Labour in Pain” (August), you hit on a number of important points about the internal contradictions of the party and hypocrisies of the “Broad Church". Nationalisation of the top 25 companies as the IWC and Labour Conference want, or top 200 as Militant wants, is, as you say, irrelevant. Labour’s paranoid pursuit of public ownership has more to do with Gaitskell’s and Wilson’s opposition to it, than its merits. We have to realise that state control of industries does not alter the plight of workers. They remain wage slaves, no matter their income or material affluence, with no power over the factors of production which decide their lives. State control merely replaces the entrepreneur with the bureaucrat, the capitalist system for the servile state. Workers self-management, or to extend it beyond a narrow industrial front into all walks of life— citizens power, can alter the present undemocratic situation. Citizens power must be built on the ideas of guild socialism and the analysis of human nature and the stale provided by group theory. This must involve seeing the state as an obstacle to radical change, no matter how enlightened those in charge, and limiting its functions and roles. However, it has to be noted, sadly, that guild socialism has been neglected and forgotten about, seen as a throwback to the Medieval age with no pertinence to the industrial age.

The SPGB constitution says it stands for "the common ownership and democratic control of the means and instruments for producing and distributing wealth . . Does this glib phrase “common ownership" mean central planning and state control or "Stalinism plus parliamentary democracy or decentralisation and citizens power over capital? We have a right to know.

The SPGB does, on the other hand, say regularly, and in "Why we are hostile” (November), that all working-class people are "enslaved" and must be "emancipated", not by enlightened Fabian elitists, but the workers themselves. This is fundamentally true. R. H. Tawney in The Acquisitive Society (1921) said:

The workers cannot have it both ways. They must choose whether to assume the responsibility for industrial discipline and become free, or to repudiate it and continue to be serfs.

Workers initiatives, take-overs and local plans, rather than centrally decided blueprints, is the only sure way of avoiding the servile state.

You say that only people who are fully in agreement with the SPGB can join. Your inability to lower the SPGB from its high, puritanical and principled pedestal of fundamental, sacrosanct ideas is sad. Socialist parties desperately need a coherent. dynamic ideological anchor to prevent policies appearing as just a "shopping list" with no underlying philosophy, and to resist the claims of capital. Principles are only of use in relation to short-term policies. You seem to miss this.

The SPGB is a valuable part of the British socialist movement. Labour, for all its faults, is socialist, though as you say in November, most Labourites "belong to a party which they imagine will one day exist . . ." However, if we keep trying, we socialists in and out of Labour can discard the stale heritage of labourism and state socialism. While Marx is still invaluable to analyse modern capitalism, particularly in the surplus theory of value and class critique of production, he cannot be dogmatically interpreted.

Dogmatism is not the answer for socialists. The SPGB should engage in an active, open and free debate with other socialists in the Labour, CPGB and other parties about the failure so far, future and road to British socialism, possibly in the Socialist Society. Any debate must be two-way, with no closed minds. We can learn from one another, sharing our experiences of capitalism and socialist action. You can give us some of your critiques and theories of capitalism, if we can give some, dare I suggest it, flexibility. Remember, together the left has enormous potential to win electoral support and change society. Divided, it has nothing. Despite our numerous differences, which are sincere and cannot be glossed over, we are on the same side—the mosaic of the socialist movement, facing a common enemy, not Thatcher or the Conservatives. but capitalism.

Gerry Hassan 

Dundee

Reply:

The Socialist Party is most willing to engage in "active, open and free debate" with those who call themselves socialists. Repeated efforts have been made to encourage the defenders of Left reformism to take the public platform and debate but, contrary to the impression given in the last paragraph of Mr. Hassan's letter, it is the dogmatism of the traditional left which has prevented them from accepting open debate with the Socialist Party. For example, the leader of Lambeth Council, Ted Knight, was asked recently to debate with us in his own borough and replied that there would be no point in such as event as the Labour Party is bigger than the Socialist Party; our Islington branch has written two lengthy letters to The Militant Tendency, challenging them to debate, but they replied in writing that public disagreement “between socialists” would be embarrassing. So, we would advise our correspondent to write to the Leftist parties and groups urging them to make contact with the Socialist Party; they will meet no dogmatic resistance to discuss ideas from us.

We are reminded that the Labour Party won 8½ million votes in the 1983 general election on the basis of a "reformist programme". What is a reformist programme, be it “left” or "right", but a plan to make capitalism run more efficiently from the point of view of the majority of people in society? That 8½ million workers were conned into believing that a Labour government could do this indicates two things: firstly, there are still plenty of deluded workers around: secondly, there are less workers being taken in by the Labour Party now than has been the case in electoral terms for half a century. The validity of Labour’s ideas is not to be judged by the number of votes they received (on that basis, we would be forced to conclude that the Tories and the Alliance are, between them, substantially more “correct" than Labour), but the extent to which they can be realistically applied as a means of solving social problems. Eight and a half million people voted for Labour’s commitment to the NATO military gang, to the continuation of the wages system, to the acceptance that there must still be poor people for whom the state will have to care. They were voting for capitalism. Our correspondent points to the 85 votes received by the socialist candidate and draws the conclusion that if most voters found Labour's programme "too extreme, they aren’t going to vote for a revolutionary Marxist party". The reason workers did not vote Labour is that they have tried it before and it is no more than another way of voting Tory. Workers did not vote for socialism because they have yet to be convinced that it is in their interests: if there had been no Labour confusion-mongers in Islington South during the last election, making promises to workers which could not be kept, there would have been more votes for socialism. The "workers will turn to full-blooded socialism” when they have had enough of capitalism and are ready to opt for a different way of organising society.

The labour illusion is well summed up by Mr. Hassan when he writes that "A little bit of socialism, time and time again is better than nothing . . .”. Socialism — a system based upon common ownership, democratic control and production solely for use — is the direct opposite of the capitalist system. It is no more possible to have "a little bit of socialism" within a world based on minority class monopoly of the means of wealth production and distribution than it would be to be a little bit pregnant. What the Labour Party’s "little bit” amounts to is a programme to reform capitalism and, as our correspondent rightly points out, these efforts have repeatedly been “blown off by capital". We are told that it is necessary to make people realise that capital will not interfere with Labour’s aims in future, but the Marxist critique of reformism is precisely that such hopes are illusory: if Labour is elected to run capitalism, as it sets out to be, it cannot but bow to the needs of profitability.

Calling in expert witness Coates damages rather than helps the case of our correspondent. What are "the best features of the old Labour Party"? Does he mean their support for two world wars or their racist immigration legislation or their strikebreaking record? Or does he mean their record of reformist promises, such as the promise of full employment made in Labour and the New Social Order or Bevan’s promise that there would be no housing problem in Britain after the Attlee government had served its term? If. by "the best features", they mean Keir Hardie’s statement in the Manifesto of the English Socialists that socialism will entail the abolition of the wages system, then we in the Socialist Party are duplicating the best features, whereas Coates and the rest of the Labourites have ignored the socialist tradition.

After the evidence from the star witness. it is a shame that our correspondent once again returns to the old dogmatic chant that history must go on repeating itself. Evidence points the other way: Labour’s traditional support is crumbling (maybe temporarily, hopefully for good) and workers are looking at alternatives. If “the only feasible road to socialism in this country is through the Labour Party", and if, after seven Labour governments, capitalism is still here, where is the evidence that the road is anything but a dead-end?

We are pleased to note that Mr. Hassan accepts the criticisms made by socialists of Labour and Militant's nationalisation (state capitalist) policies. Indeed, we do "have to realise that state control of industries does not alter the plight of workers” — as the miners will testify. It is a pity that our correspondent's clear recognition that state capitalism is not socialism is not applied to the equally non-socialist theory of "guild socialism", as advocated by reformists like G D H Cole in the distant past. The fallacy of “workers’ control” is based on the failure to recognise that where there is a working class — where wage labour exists as a social relationship to capital — the only result can be exploitative. "Guild socialism" presented a naive plan to decentralise and democratise capitalist exploitation. If it has been "neglected and forgotten about”, as our correspondent states, working-class knowledge will be none the poorer.

We are asked whether our Object implies central planning, Stalinism, or decentralised power over capital. It means none of those things. It would be ludicrous to envisage world socialism as a society run by a bureaucracy on a central plan: clearly, common ownership will require a democracy organised by the majority. We do not advocate Stalinism, and socialism means more than parliamentary democracy: our Object commits us to working for democratic control, that is, the making of decisions about society by its citizens on the basis of full information, as for control over capital, we can only reiterate that there will be no wage labour-capital relationship in socialist society and therefore citizens will no more have power over capital than they will over the banks, the police force or the torture chambers: these social features will not exist.

We are not proposing, then, any "centrally decided blueprints", but will leave it to the workers who establish socialism (who we hope will include us) to make the plans. We agree that most plans can be made locally but, under capitalism, "workers’ initiatives, take-overs and local plans" are constantly inhibited by the fetters of the profit system.

Mr. Hassan's comments about principles invite the Socialist Party to fall into the political pit which the Labour Party is stuck in. We are told that only allowing workers to join who agree with us is "puritanical" and "sad”. We say that letting racists, nationalists, religious cranks. Leninists, pro-NATO supporters, careerists and "Wilsonian pragmatists” into the Broad Church is not just sad. but pathetic; not principled, but disgustingly opportunist.

We are told that “principles are only of use in relation to short-term policies". We have a policy (which is neither short nor long-term, but as long as it takes us to achieve) which is to abolish capitalism and establish a world free of class division, exploitation, property relationships, poverty, war and wage slavery. Those aims are urgent and we are not going to be deterred in struggling resolutely for them by those who tell us to unite with the crumb-collectors of the Left.

How nice to be told that "The SPGB is a valuable part of the British socialist movement". We have been waiting eighty years to meet the other part, but have no illusions that we will find it in the Labour Party or any of the other organisations which seek to re-arrange capitalism. Indeed. “Dogmatism is not the answer for socialists" and that is why those who still hold on to the pathetic belief that Neil Kinnock and his fellow reformists will eradicate the nasty bits of capitalism ought to abandon the Labour Party and join a party which defines socialism with clarity, fights for the new system with enthusiasm and remains uncompromisingly hostile to the apologists for capitalist politics.

Editors

This Month's Quotation: R. H. Tawney (1940)

The Front Page quote from the February 1940 issue of the Socialist Standard

  “The exploitation of the weak by the powerful, organized for purposes of economic gain, buttressed by imposing systems of law, and screened by decorous draperies of virtuous sentiment and resounding rhetoric, has been a permanent feature in the life of most communities that the world has yet seen.”

R. H. Tawney

This Month’s Quotation

The passage quoted on the cover is from R. H Tawney’s “Religion and the Rise of Capitalism.' (Pelican Books. 6d. Page 252.)

Inquest on the last Labour government (1972)

Book Review from the July 1972 issue of the Socialist Standard

Labour and Inequality. Sixteen Fabian essays. Edited by Peter Townsend and Nicholas Bosanquet. Hardback £3.50, Paperback £2.20.

There have been four periods of Labour government in this country—1923-4, 1929-31, 1945-51, and 1964-70.

Each one has ended with internal dissension and disappointment, and rejection by the electorate, and each has been followed by inquests to find out what went wrong and proposals to do better next time. For some groups in the Labour Party the explanation is always the simple one that they had the wrong leader. This book does not belong in that category. It is a detailed examination by sixteen “experts”, often a highly complicated technical examination, of Labour government policies in different fields, the effects of those policies and in general their failure to produce the results expected. The essays are grouped under three main headings: The Social Services; Inequality in Income, Wealth and Status; and Human Rights and Social Planning.

The editors admit that this book will not bring much joy to members of the Labour Party:-

In many ways this is a critical book. While noting the achievements, most of the authors have failed to find evidence of marked changes in the direction of fulfilling socialist objectives. Their analyses present a gloomy picture. They confirm the inability of the government to use its power on behalf of the weaker members of the community.

Of course when the authors write of the Labour Party’s “socialist objectives” they do not at all mean the abolition of capitalism and the establishment of Socialism. What they have in mind is broadly the promise to eliminate extreme poverty and secure a greater degree of equality which featured in the Labour Party’s declaration of policy adopted forty four years ago (Labour and the New Social Order, 1918).

That 1918 declaration is of particular interest because it placed on record the Labour Party’s determination to deal with the inequality of wealth ownership. It referred to “the one-tenth of the population which owns nine-tenths of the riches of the United Kingdom”, and promised a "revolution in national finance” to remedy it. The present book examines what the last Labour government did about wealth ownership. The author is Michael Meacher, member of Parliament for Oldham West and formerly lecturer in social administration at York University and the LSE.

He quotes what he says has been a widely accepted estimate of less unequal wealth ownership, and refers to the belief that inequality is on the decline, commenting "Both assumptions are open to extreme doubt”.

He examines several calculations of wealth ownership and argues that they are seriously inaccurate because, among other reasons, they do not allow for the extensive evasion of estate duties payable on death—“Capital has not been taxed away, it has been hidden away”.

Of various methods of estimating the degree of inequality of ownership he thinks that used by the Economist is “perhaps more reliable”. This estimate, related to the year 1959-60, showed one per cent of taxpayers owning 40 per cent of total wealth, two per cent owning 55 per cent, and seven per cent owning 84 per cent. “Indeed the richest tenth of one per cent was actually found to own 13 per cent of total wealth, a sum of £7,033 millions, representing an average fortune of rather over one-third of a million each”.

While not in exactly the same form as the 1918 figures it is clear that little if any change has occurred in half a century and Meacher doubts if any change is going on now.

Two indications of the uselessness of Labour attempts to improve capitalism are mentioned in the book: male unemployment doubled under the last Labour government and in April 1970 5 per cent of men and 55 per cent of women had earnings under £15 per week.

The book quotes from a statement made in 1934 by the late Professor Tawney about “the degeneration of Socialist parties on assuming office” (by “Socialist” he of course meant Labour). He meant their failure to carry out their declared intentions. About the same time the leader of the Labour Party, Clement Attlee, in his book The Will and the Way to Socialism, claimed that the Labour Party believed in “the abolition of classes and in an equalitarian society”. He explained clearly what he meant by equality. Under Labour government there would be “no little cottages and no large private houses. All would be reasonably well housed” and there would, for example, be no government subsidising of “luxury living for millionaires” because there would be no millionaires.

Attlee was Prime Minister from 1945 to 1951, and Wilson from 1964 to 1970. Attlee’s pledge should be read in comparison with what the present authors have to say about housing and the inequality of wealth.

Edgar Hardcastle

Cooking the Books: The theology of interest (2009)

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

Sharia-compliant Islamic banking is apparently expanding with even non-Muslims switching to Islamic banks, reports the London Times (12 March). According to the article’s author, Alex Wade, “under Sharia law, the charging or paying of interest is prohibited”. But, since banks do business by borrowing money at one rate of interest and re-lending it a higher rate, how can a bank which does not pay or charge interest exist?

This is to underestimate the subtlety of Islamic theologians, following in the footsteps of their end-of-Middle Ages Catholic and Protestant counterparts. In the Middle Ages the dogma of the Catholic Church banned usury, defined as charging money for a loan. Well, but not quite:

“No man, again, may charge money for a loan. He may, of course, take the profits of partnership, provided that he takes the partner’s risks. He may buy a rent-charge; for the fruits of the earth are produced by nature, not wrung from men. He may demand compensation - interesse - if he is not repaid the principal at the time stipulated. He may ask payments corresponding to any loss he incurs or forgoes. He may purchase an annuity, for the payment is contingent and speculative, not certain” (RH Tawney, Religion and the Rise of Capitalism, ch 1(ii)).

What was banned, then, was only the certainty of being paid a pre-fixed sum of money for the loan. As Tawney pointed out, the very word “interest” derives from one of the ways of getting round the ban on usury.

Islam, too, allows partnerships as well as a number of other arrangements which allow the payment of a pre-fixed sum of money for advancing money. Wade’s article mentions: salaam (“sale contract with deferred delivery”), arboum (“sale contract with a non-refundable deposit”) and murabaha (“deferred sale financing”).

So, while Islamic banks do not borrow money on the money market, they can still make what are in effect loans which bring in money for them. In any event, Islam is not opposed to profits and profit-making since these are regarded as non-certain rewards for advancing money.

In the end the Catholic church was obliged to face reality and, to try to keep the poor from being exploited by usurers, from the middle of the 15th century itself set up bodies to lend money to the poor. These were called monts-de-piété (literally “mounts of piety”), which is still the French word for pawnbroker, though on the Continent these are state-run bodies. They did not spread to England as Protestantism, which triumphed here in the 16th century, had no qualms about lending at interest. As a result pawnbroking has always been a private business here.

And these days in fact a profitable business which, along with cheapo shops like Aldi and Lidl, is doing well in the current depression. The leading pawnbroker firm in Britain is H&T, whose shares are quoted on the Stock Exchange. It has 105 stores and made £10 million profits in 2008 compared with £7.1 million in 2007. It charges 8 percent interest per month.

Wade doesn’t say if there are any Islamic pawnbrokers, but it shouldn’t be difficult to find some imam or mullah to justify this as a form of “deferred sale financing”.