Cooking the Books: The rich remained rich (2025)

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

‘Why’, the Times asked a few days after Trump announced the imposition of tariffs on imports into the US, ‘are global stock markets in a tailspin?’ Their answer was substantially correct and surprisingly honest:

‘The short answer is President Trump’s tariffs. The longer answer is that global investors are betting that the president’s tariff walls will result in a fall in corporate profits as companies face higher costs and lower demand for their goods. The prospect of falling profits encourages investors to sell their shares because it means companies will not be able to pay as much out in dividends and will be worth less in future’ (8 April).

Shares are, as the word suggests, a share in the ownership of a business and entitle their owner to some of the profits of that business. They can be traded in their own right independently of the activity of the business. The price at which they are bought and sold depends on the anticipated future profits of the business and is mainly arrived at through the expected stream of future profits being expressed as a notional capital sum which, if invested, would bring in the same amount. But this sum only exists as a share of anticipated future wealth which may or may not be realised.

This is where the Times was being honest in talking about ‘betting’ because that’s what trading in shares is partly about. Traders buy shares at a certain price because they calculate that the shares will bring in a bigger dividend or that they can be sold later at a higher price. But there is no guarantee that either will happen, any more than there is a guarantee that a horse you bet on will win. It may but, then again, it may not.

However, the stock exchange is not just a casino. It is also a place where a business can raise new or extra capital to invest by selling new shares. But once these have been issued and bought they can be traded and subject to betting and speculation just like any other shares. If their price goes up that does not of itself mean that the business that issued them has more capital to invest. Similarly, if their price falls, that doesn’t of itself reduce that capital.

The movement of the prices of shares does not affect, either way, the value of the real wealth in which capital has been invested. Obviously it does affect the amount of notional capital attributed to shareholders:

‘The world’s 500 richest people lost a collective $536bn (£417bn) in the first two days of stock market trading after Trump’s “liberation day” announcement last Wednesday. It was the biggest two-day loss of wealth ever recorded by Bloomberg’s billionaires index’ (Guardian, 7 April).

The losses here are calculated from the fall in the price of the huge holdings of shares that Musk, Zuckerberg, Bezos and the others hold in the companies they founded. But it was not a reduction in the capital value of the real wealth they own as the means of production held by their companies. That remained the same. It was a reduction in the size of a notional capital sum based on expected future profits, as traders adjusted their bets on the size of these. To some extent, a reflection of a change of betting odds.

The fall in share prices sparked by Trump’s tariffs did not mean that the value of any of the real underlying wealth the billionaires owned was wiped out, simply that the current market valuation of it was reduced.

These Foolish Things: Monopoly money (1995)

The Scavenger column from the October 1995 issue of the Socialist Standard

Monopoly money

Most members of the capitalist class avoid drawing attention to themselves. For example, one of the largest owners of property in London is the son of a German banker, Otto Wisskirchen. This discreet young man, educated at Lancing public school, has so far bought shops and offices in London worth nearly £400 million. But he is only one of a number of German capitalists who have, between them, bought £2.5 billions-worth of central London in the past five years.

Salary slaves

Research by the Institute of Personnel and Development reveals that 42 percent of senior management and a third of middle management said work pressures meant they were failing to take all their annual holidays . . .

After a strong start to the year, recruitment of managers and senior specialist staff has fallen to disturbingly low levels . . . the last time the higher-paid job market showed a similar downward pattern was in 1989, when a severe recession followed. Blaine Cavanagh and Michael Dixon, Financial Mail on Sunday, 16 July 1995.

There's a law against it

Recent Home Office figures show that the use of illegal drugs is escalating out of control in Britain, in spite of strenuous efforts by police and customs officers to prevent it. Registered addicts (only a small fraction of the total) have increased by twenty percent to 34,000 and deaths of addicts by 7.5 percent. Last year the number of those applying for medical treatment shot up to 6,000.

Rich for the Law

The Lord Chancellor is trying to save money on the historic lodgings used to accommodate High Court judges on circuit. These arc often listed buildings, costly to maintain, and staffed by butlers, cooks and housekeepers.

There are 33 lodgings costing £4 million a year. The dearest has been Lincoln, occupied by only one judge for six weeks of the law’s 36-week year. This works out at £24,098 per judge-week.

Lord Mackay has no plan to change this system which bolsters the majesty of capitalist law, but he would like to reduce the average cost to a modest £2,500 per week’s use.

The (un)Free Market

When economists sing the praises of The Market and its ability to regulated capitalism’s running of society, they conveniently forget the universal scope the market provides for dishonesty, and the huge superstructure of law and enforcement needed to deal with it.

In 1986, the Financial Services Act provided for the setting up of the Investors’ Compensation Scheme for those who became casualties of the investments market. But the investment companies involved had to be authorised firms already controlled (avowedly) by one or more of the following: Financial Intermediaries’, Managers’ and Brokers’ Regulatory Association; Investment Management Regulatory Organisation; Life Assurance and Unit Trust Regulatory Organisation; Personal Investment Authority; Securities and Futures Authority.

ICS paid out £25.4 million in 1994 to 2,276 such investors from money provided by the investment industry, but the recent life assurance scandal threatened to disrupt the compensation scheme; and the Treasury had to back ICS with a guaranteed £17 million. 

The Scavenger

Material World: The world of commodity trading (2023)

The Material World Column from the October 2023 issue of the Socialist Standard

Clicking through to the commodities news section on the internet (such as reuters) is like taking a glimpse into the future. The stories there detail the raw stuff of life and the struggles to come to secure access and control over those things. Headlines such as ‘Gold eases as US dollar bumps higher before Powell’s speech’, ‘China’s biggest salt maker urges public not to panic buy after Fukushima discharge’ or ‘India’s food price surge forces government measures to improve supplies’ (to take just one day’s offering) prefigure the social and political events to come.

While we would normally understand a commodity, in Marx’ words as any ‘object outside us, … that by its properties satisfies human wants of some sort or another’ produced for sale, when discussing commodity markets journalists and traders understand them as ‘a market that trades in the primary economic sector rather than manufactured products, such as cocoa,’. So, that is food cereals, oil, metals and the like. The firms that trade in these goods are, as Blas and Farchy relate in their book The World for Sale, an ‘international clearing house for essential goods.’ As they explain:

‘Commodity traders are arbitragers par excellence, trying to exploit a series of differences in prices. Because they’re doing deals to buy and sell all the time, they are often indifferent to whether commodity prices overall go up or down. What matters to them is the price disparity. By exploiting these price differences, they help make the markets more efficient, directing resources to their highest value in response to price signals.’

Or, put another way, they make use of information disparities to make their money, making use of networks of knowledge and connexions in industries to predict and find price disparities to target. The advent of the internet and modern computer communications technology has revolutionised the industry, removing some of the advantages some of the older trading houses had.

Trading water

Such trading is oblivious to human need, and is contrary to the quoted section above, only driven by effective demand. So, news reports that: ‘Water has joined gold, oil and other commodities that are traded on Wall Street, as worries about the uncertainty of its availability in the future rises. The US’s water trade market, the first of its kind, launched on the Chicago Mercantile Exchange with $1.1 billion in contracts tied to California water prices’ (earth.org/water-trade/) is alarming. This will enable spot markets and futures markets over the price of water.

There have been instances of commodities firms cornering the supply of a commodity (such as aluminium) in order to maximise their profits. Commodities markets put social power into the hands of the commodity traders, and give capital power over society. Further, the traders seek to take control of the supply chain, seeking competitive advantage by integrating all the stages of bringing the commodity to market.

In this way, they are recreating the way industrial capitalism emerged, as Jairus Banaji notes in his A Brief History of Commercial Capitalism:

‘Next to monopoly of the raw materials (wool of different qualities, dyestuffs, alum), integration of control over all these separate processes was the true basis of the merchant’s dominance in capitalistically organized domestic industries. (…) By compressing the chain of circulation … vertical integration increased its velocity and re-appropriated a part of the surplus-value that accrued to middlemen.’

Banaji also observes generally through his text how the physical presence of the merchants, and their contacts with political and military power, secure and control their markets, hence the movements and reports about commodities markets ripple out into the political and international realms, driving the actions of governments. This had led to many corruption scandals among the commodity trading world, as they slosh money around to their contacts to secure favourable terms. But, also, they are able to make quick agreements, accepting commodities in lieu of cash, as well as the converse of supplying cash when other financial bodies will not.

For example, in the 1980’s, Marc Rich & Co. was able to cut a deal to supply Jamaica with $10 million worth of oil (without even a formally signed contract). In return his firm secured favoured access to Jamaica’s bauxite and alumina. Further, the firm was able, through creative accounting, to bypass international financial institutions such as the IMF. The flip side of this was when local politicians started to suspect the traders were taking advantage of them, the traders were able to bring to bear international pressure to deter investigation. Similarly, the commodity traders were interested in profits, and would work with (and prop up) regimes of any stripe as long as they could get access to the goods.

Such manoeuvring allowed a relatively small circle of firms, such as Vitol, Phillip Brothers, Cargill, Trafigure and Glencore (who, for example, made $3,408 million net profit in 2018), to dominate many commodities markets.

For the billions, not the billionaires

These firms do provide a useful role in worldwide production in bringing agents in the productive process together, but they make their profits, essentially, from taking advantage of gaps in information. Opening up the information of stocks, orders and production would enable a co-operative community to carry out its own production. As we say in our pamphlet Socialism as a Practical Alternative:

‘On the smallest local scale, information centres could monitor the position of stocks and productive capacity to meet local needs. By collating these statistics, regional information centres would be in a position to know the complete picture throughout the region. This could be achieved by also monitoring the position of stocks, productive capacity and needs among regional production units.

A world information centre could collate regional statistics in a similar manner. This would be a connected but decentralised world information system providing any combination of information that people required.’.

The commodities news – as it is – is a record of the minority rule of billionaires. It could become the means of self-control for the lives of billions.

Pik Smeet

Finance and Industry: Even more Superfluous (1967)

The Finance and Industry column from the May 1967 issue of the Socialist Standard

Even more Superfluous 

A common defence of capitalism is that now-a-days millions of people are investors, directly or indirectly, in industry. Pension funds, insurance policies and unit trusts are cited as examples. The suggestion is that wealth is more evenly distributed. Harold Wincott, in the Financial Times of 7 March, in discussing a survey on how big business gets its hands on our savings, puts it this way: 

And, finally, a word on the alleged enormous discrepancies of wealth in this country we are always being told about How does one reconcile the recurring calculations that x (a tiny) per cent of the population owns y (a vast) per cent of our wealth with Dr. Richebacher’s figures of the massive and continuing movement away from private hands into the hands of institutions which hold them in trust for the people?

If Wincott thinks that the calculations showing “enormous discrepancies of wealth” are wrong it’s up to him to show where. In fact these calculations do take into account pension schemes, insurance policies and unit trusts. Wincott asked a question and got his answer from a correspondent who made the simple point:

The short answer may be to ask why one should attempt it. Surely the types of assets owned can vary without affecting x and y.

In fact the whole argument bears all the marks of a public relations trick to gain popular support for Big Business and the Stock Exchange against any measures they feel might harm their interests.

A study by the London Stock Exchange, How Does Britain Save?, was published last May. It shows 33.5 million out of the 36 million adults in Britain save in one way or another. These savings are broken down:

The two-and-a-half million share owners (only 7 per cent of the adult population) are further broken down (some have more than one type):

There has been a shift from individual to institutional investors on the stock exchanges though not all these institutions hold shares “in trust for the people.’’ The insurance companies and banks are profit-making bodies whose own shares are traded on the stock exchange. In any event, the wealth of institutions can be traced back to individuals in the end and this is done to get estimates of the concentration of the ownership of wealth.

It is difficult to see how the growth of institutional investors is a justification of capitalism. In fact it makes the basic absurdity of capitalism—social production yet sectional ownership—even more obvious. When the joint-stock company appeared a hundred or so years ago, Marx wrote that in separating management from ownership it meant that “the capitalist disappears as superflous from the productive process." Engels was less polite. He spoke of “parasites”.

Now the last in the long list of social functions the capitalists imagined they had has gone: as individuals they can no longer claim to be the main source of finance for industry. Even this function, only necessary under capitalism, is now carried out by anonymous institutions. The individual capitalist — one-time alleged abstainer, organiser and risk-taker —is shown to be superfluous even in the realm of finance.

The savings of wage and salary workers, such as they are, are mainly funds to use when not employed. Having a few hundred or even a few thousand pounds worth of savings doesn’t turn anybody into a capitalist. Even the slaves in Ancient Rome had a fund called a peculium, collected from tips, which they could use to buy their freedom when old. A capitalist is someone who has enough wealth to live without having to sell his mental and physical energies.

Accepting that shareowners are now

functionless, Labour theorists argue that ordinary shares should be abolished and all investors receive just a fixed rate of return. Callaghan, the present Chancellor, told the 1952 Party Conference:

Instead of making the Ordinary shareholders residuary legatees of all profits that are made, let us make the workers the residuary legatees. Let the shareholders be content with a fixed dividend. Let us abolish Ordinary shares.

The government has brought in a new Companies Bill but, needless to say, even Callaghan’s suggestion is now too radical. Not that converting equities into fixed interest stocks will end the exploitation of man by man or abolish the right of property-owners to a property income.

The real solution should be obvious: convert the already socially-operated means of wealth-production into the property of the whole community. Then production can be organised for use without the restrictions of profit-making, finance and commerce.

Adam Buick

Stock Market shake-out (1989)

From the January 1989 issue of the Socialist Standard

They said it would never happen again. Never again would there be mass unemployment. Never again would there be a stock market crash. Capitalism had overcome its contradictions and prosperity would be permanent. Marx was wrong and Keynes was right. This was the message put over by the economic gurus of capitalism in the 1950s and 60s.

This illusion began to shatter in the early 70s when falling profit levels led to closures. redundancies and rising unemployment in all the major industrial countries of the world. Soon the number out of work in these countries reached mass proportions. Ten, eleven, twelve, thirteen per cent of the workforce rather than the two or three per cent that economists claimed would be the norm under post-war capitalism.

Despite this industrial slump the boom on the stock market continued after a slight falter. But sooner or later this boom too had to come to an end, since capitalism can't change the fact that the source of wealth remains the actual production of physical goods and services and not financial juggling. No wealth is created on the stock exchange or on any other financial market. All that happens on these markets is that existing wealth changes hands. The same is true of all financial institutions — banks, insurance companies, building societies, pension funds and so on — they are all involved in mere money-changing, not wealth creation.

The basic economic role of financial markets under capitalism is to channel finance to productive industry, although these markets can also develop a life of their own divorced from the reality of production. The stock exchange is a market on which the stocks and shares of capitalist firms are traded. Normally the price of a firm's share reflects its profit-making record and prospects but, as on all markets, day-to-day prices are determined by supply and demand. If the demand for shares keeps on rising then so will share prices. This is precisely what happens in a stock market boom. Share prices keep rising, not because the profit prospects of the firms whose shares are traded are improving but simply because the monetary demand for shares goes on increasing

Under these circumstances people can make money simply by using a telephone, buying shares on credit in the morning and paying for them in the afternoon after selling them at a higher price. (This is all the Yuppies used to do.) But share prices can't go on rising for ever. Sooner or later the bubble must burst. As it did on the Stock Exchanges of the world at the end of October 1987 Reality reasserted itself and the stock market boom came to an end.

Because the Great Slump of the 1930s was preceded by the Great Stock Market Crash of 1929. many wondered whether the Crash of 87 was not going to herald some Great Slump of the 1990s. Labour MP Ken Livingstone, for instance, immediately went on record with a prophecy: "It's not just a slump that has happened on the stock market: it will be the worst recession that has happened since the Second World War and it will change all political relationships and all economic and military relationships" (Guardian, 26 October 1987).

The trouble with a prediction of this sort is that it ignores a fundamental difference between the crash in 1987 and that of 1929. The 1929 crash occurred in a period of capitalist prosperity, the source of the demand that fuelled the stock market boom being the increased profits made in productive industry. 1987's crash , on the other hand, occurred in the middle of a slump, the source of the extra demand for shares being the cash capitalist firms had available because they were not investing in productive industry. In other words, the 1987 crash does not need to herald a slump since it occurred in the middle of one.

In any event slumps are not caused by financial crashes even if, historically, they have often been preceded by one. They occur as a result of developments in what even capitalist economists have taken to calling “the real economy", that is to say, the world of the actual production of wealth. Under capitalism wealth is not produced for use but for sale at a profit. Profit is in fact the motivating force of the capitalist economy. All firms seek it and all their activities are subordinated to this end.

A slump is by definition a time when firms have cut back their investment in production, but they will have done this because investment in production on the previously-existing scale has ceased to be profitable. Profit prospects fall when a market has become glutted through overproduction (in relation to market demand not real needs, we hasten to add), as inevitably happens from time to time under capitalism since the competitive struggle for profits between rival firms leads to over-confidence and the production between them of more than the market for their goods can absorb, at least at a price that yields a profit.

If this overproduction has occurred only in some minor sector of the economy then the cut-back will be largely confined to that sector. But if it occurs in some key sector, such as steel, shipbuilding or car manufacturing. then this will have a knock-on effect on the whole economy as its suppliers, and their suppliers, and so on, are forced too to cut back on production and lay off workers. The result is a slump, be it a really major one as in the 1930s and 1880s or less severe one like that we have been in since the mid-1970s.

The stock market crash on top of the mass unemployment that returned in the 1970s, finally disposed of the myth cultivated by defenders of capitalism in the exceptionally long boom that followed the Second World War.

Voice From The Back: Green shoots of recovery? (2010)

The Voice From The Back Column from the February 2010 issue of the Socialist Standard

Green shoots of recovery?                           

Financial “experts” keep claiming that world capitalism has recovered from economic crisis and point to the increase in some stocks and increases in bankers bonuses as evidence of that recovery. They completely ignore the mounting unemployment and the repossession of workers houses. Here is a recent example of homelessness in the USA. “That insecurity is becoming more common in the suburbs these days. Officials say that homeless shelters are suddenly filled to capacity, with some suburban communities resorting to housing families in motels, for the first time in years. On Long Island, Nassau County officials have seen the number of people seeking shelter rise by 40 percent compared with this time last year, while in Suffolk, the number of families seeking shelter for the first time rose by 20 percent. In Connecticut, in an annual one-day survey taken in January, the number of people in emergency shelters was 33 percent higher than the year before” (New York Times, 11 December). So while financial “experts” talk of economic recovery thousands of workers in the most advanced capitalist nation in the world huddle into homeless shelters. A typical example of capitalism in action.

Capitalism is obscene

Every day we are confronted by appeals to help the starving, the undernourished and the children dying from lack of clean water or simple medical attention. We are beseeched by well-meaning workers to give a few pounds to this or that charity appeal. It is an every day experience for workers but how do we relate to this piece of information? “Four directors at Paulson Europe, the London-based arm of one of the world’s most successful hedge funds, took home more than £50m last year after successfully betting on the near-collapse of the UK banking sector. The four directors – which include Paulson & Co, the US hedge fund run by billionaire investor John Paulson – saw profits at the partnership rise 37pc to £50.8m in the year to March 2009, according to documents filed at Companies House. The highest paid director, likely to have been Paulson & Co, received £28.6m. The three London-based directors – Nikolai Petchenikov, Harry St John Cooper and Mina Gerowin – split the remaining £22.2m between them” (Daily Telegraph, 7 January). In a society of extreme poverty such wealth is truly obscene.

This Sporting Life

There was a time when sport was supposed to be a pleasant physical exercise. The popularity of association football inside capitalism made it an activity much adored by workers too unfit to play it themselves, but keen to follow the efforts of their local sporting heroes. With the development of capitalism football has just become another business opportunity. Its development more likely to be followed by financial journalists rather than football ones. “Manchester United is exploring a bond issue as part of efforts to refinance its £700m debt, with the English Premier League champions in talks with two banks about how to reorganise its borrowings. JPMorgan and Deutsche Bank are advising the football club on its options. It is one of a number of clubs whose debts have alarmed football authorities. People familiar with the situation said the options under consideration included the issue of high-yield bonds. These would be used to refinance bank debt or payment-in-kind notes – an instrument that allows borrowers to roll over cash interest payments – which helped Malcolm Glazer, the US sports franchise owner, and his family take over Man United in 2005 in a £790m leveraged buy-out. The club would be the latest company to take advantage of the recovery in bond markets to refinance debt” (Financial Times, 2 January). Every activity that capitalism touches it turns into commodities.

Behind the glamour

Capitalism is a society based on deceit. It purports to be based on freedom yet it is a ruthlessly class-divided society that enslaves millions in its quest for greater and greater profits for its owning class. A good example of the facade that is capitalism is the recent completion of the tallest building in the world the Burj Khalifa in Dubai. This 2,717 foot edifice has 600 apartments, 300,000 square feet of office accommodation, the world’s highest swimming pool and mosque. Behind this facade of opulence lies another story. “Many of Dubai’s construction workers live on starvation wages: £120 a month on average for a six-day week, with shifts of up to 12 hours…Construction workers on the Burj Khalifa have rioted on several occasions, including in March 2006, when 2,500 protested at the site, and again in November 2007. A Human Rights Watch survey found a cover-up of deaths from heat, overwork and suicide in the emirate. The Indian consulate recorded 971 deaths of their nationals in 2005, after which they were asked to stop counting” (Observer, 10 January). Death, destruction and exploitation, that is what lies behind this monument to capitalism’s avarice.

Voice From The Back: Ain’t Science Wonderful? (2001)

The Voice From The Back column from the May 2001 issue of the Socialist Standard

Ain’t Science Wonderful?

Good news for police forces and repressive regimes throughout the world, those wide-eyed men in the flapping white coats have come up with a new anti-demonstration weapon, that must delight “all of us right thinking people”:

  “Riot shields and water cannon may soon be made obsolete by a revolutionary weapon that can stun a hostile crowd with invisible microwaves. The US Vehicle Mounted Denial System (VMADS), a radar dish mounted on the back of a tank or jeep, is interesting British police forces. The VMADS, or ‘people zapper’, uses a ‘directed energy beam’ according to a Pentagon spokesperson, ‘When it comes into contact with skin it causes a sensation of heat to an uncomfortable level.'” Observer, 25 March.

Good Riddance

There probably wasn’t a dry eye in the House of Commons when Tony Benn, 75, MP for Chesterfield gave what was probably his valedictory address to the House. He recalled that members of his family had sat in the Commons since 1892 and that he “loved the place”. It was obviously an emotion-packed occasion, because one Tory talked the most arrant nonsense about Benn:

“John Bercow (Conservative, Buckingham) called him the country’s greatest living socialist and reatest living parliamentarian.” Times, 23 March.

Of course, Benn never was a socialist. He is a life-long supporter of the Labour Party whose anti-socialist, indeed anti-working class record has been well documented in this journal. But, don’t take our word for it; Benn once wrote in a rare moment of lucidity-“We must add . . . a clear recognition that the Labour Party is not—and probably never was—a socialist party” (Independent, 17 May 1989).

Child’s Play

Mrs. Thatcher, wrong as usual, called them “the real wealth creators of this country”—she was referring to a small section of the population who were wheeling and dealing in the City of London. We have often pointed out that the actions of stockbrokers and investors produce no wealth whatsoever. But defenders of the financial sector have argued, that even if that was true, it is still true that these men and women are highly skilled. Now, even that claim looks indefensible:

“A four-year-old girl proved the stock-market was child’s play yesterday by winning a share prediction contest against an investor and an astrologer . . . Tia picked her shares at random, financial astrologer Christeen Skinner studied the heavens and Mark Goodson used his experience as a private investor. Ms Skinner lost 10 percent of her £5,000 shares while Mr. Goodson lost 7 percent and Tia lost 4.5 percent.” Guardian, 27 March.

Carefree Days?

Those happy TV ads that feature carefree school kids enjoying their teenage years in security and comfort have always looked a bit phoney, but a recent report by the TUC has revealed just how phoney they are for a large section of working class children:

“At least 500,000 schoolchildren are working illegally with many playing truant to do so, according to a report . . .The report by the TUC revealed that a quarter of those under 13-289,000-worked, even though it is against the law for them to do any kind of paid job . . . The report, Class Struggle, revealed that one in ten children played truant to do paid work. Almost one in five received less than £2 per hour and around a third were on £2.50 or less an hour. It also found that almost half of children under 16 worked after 8pm and 23 per cent worked before 6am, despite the law stipulating that they are not allowed to work before 7am or after 7pm .” Daily Telegraph, March.

Major surgery needed

   “British GPs are offering kidneys for sale from living donors in the Third World to wealthy patients who want to jump the queue for a transplant. The illegal kidneys-for-cash trade involves dozens of British patients who travel to India to receive kidneys from impoverished donors, who are paid up to £3,000.One doctor claimed last week he could arrange for a kidney to be bought and transplanted in London . . . Dr. Jammail Singh, who works at Hellfields health centre in Coventry, told an undercover reporter that £2,000 was the ‘general’ price for a kidney. ‘Although it is a lot of money for them, they’re doing an extraordinary thing,’ he said. ‘They are generally manual workers. Just imagine if something goes wrong with the remaining kidney—they will be crippled for life.'” Sunday Times, 1 April.

Try and imagine the desperation of a £15 a month labourer in India who has to sell a kidney in order to feed his family. The whole system is an abomination, and the sooner the working class surgically remove the cancer of the profit motive from society the better.

Running Commentary: Thatcher and Socialism (1987)

The Running Commentary Column from the April 1987 issue of the Socialist Standard

Thatcher and Socialism

On January 31 1987 it was reported in the Daily Telegraph that Margaret Thatcher had made a remarkable statement. She hoped for a further term of office so that she could finally eradicate socialism from Britain. Knowing Thatcher's track record we see in this utterance a deliberate attempt to mislead the electorate. Socialism, as we are continually pointing out, has never existed anywhere and, in any case, it could not exist in one country. It has to be worldwide.

Thatcher always tries to give the impression that she is thoroughly honest and sincere, but we are not impressed for this is all part of the plan to hoodwink the voters. What we have is capitalism and socialists are doing their best to persuade the working class to get rid of it and replace it with a worldwide system of common ownership.

Capitalism, by its very nature, cannot run smoothly. It is teetering on the edge of another war. The EEC are at loggerheads with one another and with America. The wars in Iran and Afghanistan are helped along by outside nations anxious to sell their latest war equipment and to test its efficiency in the same way as during the Spanish Civil War. States not at war see battlefields as opportunities for making a profit.

Gorbachev has stated that he prefers the capitalism of Thatcher to that of her Labour opponents. Will we now see a split in the Thatcher-Reagan camp and a closer relationship between Thatcher and Gorbachev? Strange things happen in the world of capitalist economics. Understanding the nature of capitalism suggested during the last "war to end" war that economic friendship might result between Britain and Germany; after the war we saw German troops training in Wales and the British supplying the German Air Force with the top secret Tornado fighter-bomber.

All this chicanery has nothing to do with the working class except that we are called up to defend this ridiculous system when the economic struggle develops into war.

The solution to this is in the hands of the working class. All that is needed is the political knowledge to apply it.

Bed and Breakfast

Sorry— but you're probably too late for this year.

No, we're not referring to two weeks in Blackpool or Ramsgate. As package tours abroad are now often cheaper than holidays in Britain, you're probably still OK for your summer holidays.

Unless you're heavily into wheeling and dealing in shares, you won't know that "Bed and Breakfast" is in fact a way of making a quick buck. The law allows you to take a tax free profit of £6,300 on shares and unit trusts; after that tax is payable at 30%. Therefore the wise ones sell shares/unit trusts tonight, making their tax-free profit, and buy them back in the morning — hence "bed and breakfast". You can carry on like this indefinitely. The only slight risk you take is the (unlikely) possibility of a sharp rise in the price of those shares/unit trusts between the evening of selling and next morning when you buy them back. Mind you, there is another snag. Allowing for a return of, say, 20 per cent, to make that tax free £6,300 you need to have £31,500 to invest in the first place. "Bed and breakfast" prices are, we are sure, a problem which does not bother many of our readers.

Wanna Buy Some Shares?

Anyone who achieved a distorted concept of their class position through sinking a couple of hundred quid — which in many cases they had to borrow — into shares in privatised state industry could learn from the great Guinness scandal what it actually means to be a member of the other class in society.

The Sunday Times of 8 March 1987 published an account by Ivan Fallon — who has written a book about the affair — of the sort of money which changed hands during the Guinness takeover battle for Distillers:

• Gerald Ronson, owner of the Heron group, invested £25m in Guinness shares, for which he was to receive a "fee" of £5m from Guinness.
• Ronson's "adviser", Tony Parnes, got a "fee" of £3m. Jack Lyons, another "adviser", got £2m.
• A subsidiary of Ephraim Marguiles bought 2.8 million Guinness shares and another subsidiary was paid nearly £1.5m for "work" in connection with the Distillers takeover.
• The Bank Leu in Zurich bought £50m worth of Guinness shares, apparently with money supplied by Guinness.
• The American Meshulam Riklis bought £30m worth of Distillers shares and invested £60m in Guinness shares.
• Lord Spens bought £75m worth of Guinness shares for clients of the merchant bank Henry Ansbacher.

Distillers was seen as ripe for a takeover because as it was organised it was not exploiting its workers, or applying the capital accumulated through their exploitation, to the maximum benefit of its shareholders. It was failing to meet an essential requirement of capitalism — maximised profit. It needed the sort of regime which Ernest Saunders had introduced into the Guinness empire; in his first two years as Chief Executive he sold or closed down 140 companies which Guinness had taken over in a vain effort to staunch the fall in its profits. The potential profits from a revamped, asset-stripped Distillers were enticing enough to attract some huge investments and some very rich capitalists.

Beside this operation, the scale of working class share buying is seen in its true proportions. Workers are not the authentic investors; they are not the owners of capital. That is the role exclusively of the capitalist class, who exploit the workers, who assert their privileged standing through capitalism's laws and its coercive state machine but who are prepared to break those laws if they see it as being to their immediate advantage to do so.

They pay richly to those who have the job of managing their operations. Ernest Saunders, before he was exposed and fired, was "earning" £370.000 a year and living in a country house worth £500,000. He is reported now to be exhausted. There is no information about the condition of the employees of the companies involved, whose labour was responsible for amassing the huge sums of money which were so skilfully deployed.

Aids for extra profits

One way you might like to consider making that tax free £6,300 is to invest in Japan. However, according to Warburg Securities, just any old investment won't do if you really want to get rich quickly. As "we expect awareness of Aids in Japan to continue to increase sharply” their recommendation is simple: buy Sagami Rubber and Fuji Latex — used, of course, to make condoms. "We expect unit growth should pick up as the Aids threat becomes apparent": strong demand "may also facilitate price increases" — the law of supply and demand operating . . .There are also strong recommendations to buy Sumitomo Chemical and Inabata Sangyo. who distribute Wellcome's AZT drug, and Fujirebio. who start marketing their diagnostic kit in April. These “should be the continuing focus of investor interest as further Aids victims inevitably come to light". So now that you know, there is no excuse for you not to make that tax free £6.300. After all, if you want to get rich quickly you can’t have scruples or consider the finer ethical niceties.

What about pension rights? (1992)

From the May 1992 issue of the Socialist Standard

Last month we looked at figures provided by the Inland Revenue and concluded that although the distribution of all forms of wealth was unequal enough—the top 1 percent own 18 percent, the top 10 percent own 53 percent while the bottom 50 percent own a mere 6 percent—the distribution of capital, as forms of wealth yielding an unearned income, was even more unequal. The top 1.5 percent of wealth-owners with £200,000 or more owned 36 percent while the bottom 65 percent owned virtually none.

Others have used a different set of figures to reach a different conclusion: those for the ownership of shares traded on the London Stock Exchange which show that only about 17 percent are now owned by private individuals (see graph). The rest are owned by commercial and financial institutions of one kind or another, in particular by insurance companies, pension funds, unit trusts and investment trusts or “institutional investors” as they are collectively known as. Since a large part of the funds of these institutions comes from small investors, the claim is made that these figures mean that the capitalist class now own only 17 percent of capital in Britain and even that the remaining 83 percent is owned by the working class.

Whatever may be the significance of the decline of the private Stock Exchange investor—what it means is that the person of the capitalist has become even more redundant, not only to organising production but now also to the specifically capitalist function of finance, making it clear that what we are up against is an impersonal system—it does not alter the figures for the distribution of capital given in last month's article.

Just because the rich no longer invest directly on the Stock Exchange to the extent that they used to does not mean that they don't do so indirectly. They too have bank accounts. They too have insurance policies (Maxwell was reportedly insured for £20 million). They too resort to investment trusts. According to the Inland Revenue figures, those with £100,000 or more (not enough at the lower end, it is true, to be a real capitalist but still only 7 percent of the population) own not only 85 percent of company shares (not just the 17 percent mentioned above but also of those held via unit trusts and investment trusts), but also 47 percent of bank accounts and 47 percent of insurance policies as well as 81 percent of other financial assets (mainly government and local authority bonds) (see Table 1).

Money invested in insurance policies, personal pensions, unit trusts, banks and building societies is taken into account in the Inland Revenue statistics—and they show that those with £100,000 or more own 61 percent of all capital. The one exception is the money in pensions funds, but would this alter the figures and who does it belong to anyway?

The Inland Revenue in fact publishes three sets of figures for the distribution of wealth. The first covers the distribution of "marketable wealth”. The second adds in occupational pension rights. The third adds in both occupational and state pension rights. The results of these additions, for what they are worth, for 1989 are given in Table 2.

Non-existent billions

The third set of figures—that incorporating state pension rights—is completely worthless. The government actuary has estimated the total value of state pension rights in 1988 to be £573 billion (Economic Trends, November 1991). As anybody who works or has worked acquires state pension rights this amount is assumed to be evenly divided amongst the adult population. So half, or £286.5 billion, is attributed to the bottom 50 percent. This is three times the total “marketable wealth” owned by this category and an average of £13.000 a person, so, by this simple device, increasing their average holding from £4000 to £17,000! Since only 1 percent of the total, or £5.73 billion, is added to the total wealth held by the top 1 percent, the overall effect is to considerably reduce the degree of inequality in the figures for the distribution of wealth. The share of the top 1 percent falls to 11 percent and that of the top 10 percent to 38 percent while that of the bottom 50 percent rises to 17 percent.

But this exercise is quite fraudulent. This figure of £573 billion—equal to more than a third of “marketable wealth”, which is wealth that really exists and is recorded in the first set of figures in Table 1—is purely fictitious. It has no real existence. There are no real assets “owned by the working class” and invested on the Stock Exchange that correspond to it. The figure is obtained by converting the flow of income represented by present and future state pensions into a notional lump sum. This is legitimate for some accounting purposes, but what is not legitimate is to go on to assume that this sum actually exists and to attribute it to individuals, in the event mostly workers, as part of their wealth.

State pensions in Britain are paid out of taxation. They are what the National Accounts statisticians call a “transfer payment”; someone else’s income is taxed and then transferred to state pensioners as their income. As taxes ultimately fall only on property incomes there are real capital assets somewhere which, through the exploitation of productive labour, yield the income out of which state pensions are paid. But these assets belong not to workers with state pension rights but to the rich property-owners on whom the taxes to pay the pensions fall.

The absurdity of converting a transfer payment into a notional capital sum and counting this as part of the wealth of the recipient can be seen when other transfer payments are given the same treatment. Income Support, for instance. It, too, could be converted into “wealth" and used to show that the poor are not really poor at all. In fact, since in many instances Income Support is higher than the basic state pension and since, being paid to people below pension age, it is payable over a longer period, the “wealth” which would be attributed to many on Income Support would be much greater than the extra £13,000 state pensioners are supposed to possess. Because attributing wealth of, say, £20,000 to someone on Income Support would be dismissed as absurd, the government's statisticians have not dared to do this calculation. They’d be laughed to scorn, as they should be for doing the same thing with state pensions.

But what about occupational pensions, those paid by employers? Most occupational pensions are not transfer payments since they are paid out of a fund that really does exist and which really is invested, among other places, on the Stock Exchange. The government actuary estimated the value of occupational pension rights in 1988 to be £441.6 billion, or on average £21,800 for each of the 20 million people in occupational pension schemes (Economic Trends, November 1991). But the total value of all pension funds is only £330 billion. It is the inclusion of civil service pensions, which are transfer payments, that is the main explanation for this discrepancy. So these must be taken out before we can even begin to take the figures seriously.

Once this has been done, there still remains £330 billions worth of real capital. Who does it belongs to? Legally it is the property of the trustees of the pension fund, who are required by law to manage it in the best financial interests of the scheme's existing and future pensioners. But this is not the whole story.

Employers are not obliged to set up a pension scheme for their employees, so those that do can be assumed to have done so in what they perceive to be their own best interest; in other words, with a view to enhancing their profits and profitability. Such factors as winning the loyalty of white collar staff, attracting and keeping skilled labour, and having a generally contented, and so more productive, workforce enter into the calculation.

If an employer wants to set up a pension scheme the law lays down that the money to pay present and future pensions must be kept quite separate from the rest of the firm's capital. Otherwise of course the temptation would be there for the employers, when they needed more capital or when they get into financial difficulties, to raid the money in the pension scheme. In most schemes the trustees are employer representatives wearing another hat and, although few go as far as the late great Robert Maxwell, they sail as close to the wind as they can. The law permits up to 5 percent of a pension fund to be invested in the employer's business. Employers can also quite legally appropriate a part of any surplus in their pension scheme:

  Companies throughout the country are wondering if they can. or should, follow Lucas by siphoning cash from their own pension funds.
 The group, based in Birmingham, has swelled its coffers by £150m. using a new rule giving companies access to what has been an untouchable source. The money came at a useful time for Lucas, whose automotive arm has been hard hit by the recession: it reduces the ratio of shareholders’ funds to company debt from 39 to 16 per cent.
 Attempted raids on the pension fund are a favourite tactic by finance directors looking to shore up balance sheets and are usually the catalyst for heart-rending schemes in which pensioners, having given the company the best years of their lives, feel distraught. insecure and betrayed . . .
 The freeing of the Lucas pension fund surplus results from a change to tax legislation governing occupational—that is, funds linked to employers’—pension schemes. (Independent, 26 November 1991).

There have also been cases where firms have been taken over by rivals hoping to get their hands on the surplus in their pension fund.

So, who do pension funds belong to? As can be seen, a strong case can be made for saying that they belong to the employers who set them up. The existence of the scheme benefits them; they have the final say in how the scheme is run and what benefits it provides; they pay most of the money into the scheme and, as the Lucas case shows, they can get some of it back when there is a surplus. On this view, the funds belong to the employers but are kept, by a legal device, in a fund separate from the rest of the capital of the business.

That there are serious difficulties in saying that pension funds are owned by the workers who receive or are due to receive payments from them is in part recognised by the Inland Revenue itself which excludes them from the figures it issues for the amount and distribution of “marketable wealth”. Their grounds for doing so are that, although in their view the capital in pension funds can be attributed to individuals and then counted as part of their wealth in the same way that they do for state pensions, these individuals don't exercise full ownership rights over it— they can't sell it or bequeath it to their inheritors; in short, they can't “market” it. To get round this the Inland Revenue has invented the strange concept of “non-marketable wealth” as wealth owned by individuals but over which they cannot exercise the basic right of ownership, namely, to sell it!

Workers have a more sensible conception of what occupational pensions are, seeing them, not as part of their “wealth”, but as deferred wages paid by their former employers.

Adam Buick

Next month: Do the rich get richer?

Socialist Brevities. (1929)

From the March 1929 issue of the Socialist Standard

Hey Presto!

Merlin and Cagliostrio were reputed to be the thing in wizards in their day. Of recent years the Welsh Wizard has eclipsed their old-time wonders. Ninepence for fourpence, for instance. But ninepence! What would you say to 2,666.6 ninepences for fourpence? Or, in good English, one hundred jimmy o’ goblins for fourpence! Not done, you say? Oh, well, you don’t read your newspapers. Besides, you do not realise the miraculous nature of the capitalist system. Read, mark, luke—I mean learn—etc., the following instance of modern necromancy as reported in the Daily News, 25.1.29:—

£100 for 4d.

  In the early stages of the Ner-Sag meeting, when the first revelations were made, but before they reached the Stock Exchange, a man rushed from the meeting to telephone his stockbroker (writes a City correspondent).
  He told them to sell 500 Ner-Sag shares which he did not possess. He sold at 17s. per share. He telephoned his brokers in the afternoon and told them to buy back the 500 shares to cover his bargain. He bought them back at 12/6 each.
  On February 7, the next Stock Exchange Pay Day, his brokers will pay him a little over £100.
  All that this “bear" operation will have cost him is 4d. for two telephone calls.

No wands, no incantations, no stinks, no ritual of any sort! All done by kindness. A wonderful system, capitalism!


Strange Bedfellows.

Wages seem to have got so high lately that they must soon be out of reach altogether. They are, of course, for some million and a half workers now. Yes, these “excessive” wages are an awful curse! This does not apply, however, to the “wages of superintendence,” or whatever the “economists” might call the “bunce” pouched by the non-workers.

There should be a law to stop paying wages altogether and let the workers eat one another. This would keep down the “surplus” population, I have little doubt. If you read the paragraph below, taken from the Daily Herald for 7.2.29, you will readily see that a substantial decrease in the wages of the worker would ease some of the unrest and discontent of the capitalists from which industry is suffering so acutely at the present time:—

BANKER WANTS WAGES CUT.

  But his Dividend is 18 per cent.

 Mr. Henry Allan, chairman of the Clydesdale Bank, moved at the annual meeting at Glasgow, yesterday, that the dividend on Ordinary shares should be 18 per cent., and then proceeded to complain of what he himself called high wages.
  Business conditions during the past year, said Mr. Allan, were disappointing. The unemployment figures showed a large increase. Unfortunately the remedy was very difficult. In the outstanding case of the railwaymen, high wages were actually fortified by Act of Parliament.
  The evil of excessive wages was aggravated by the general fall in prices which followed the return of the gold standard. Prices had fallen about 15 per cent. since 1924, without any corresponding reduction in wages.
  The 18 per cent. dividend was adopted.

Now, boys, let us all pull together and try to make that 18 per cent. into 1,800 per cent. !


Those Pampered Workers.

East is East and West is West
   And ne’er the twain shall meet-O!
Left is Left and Right is Right
   (With knobs), ditto repeato!

                                                   Anon.

What philosophical depths are plumbed by these lines! What fecundity of thought! But lately I have been assailed by doubts as to whether they apply always and without exceptions. “Liberalism,” for instance, whatever else it may be, I am told, is “Liberalism.”

Similarly, I suppose, “Labour” is “Labour,” and that might or might not explain anything or nothing, whichever may be chosen. But that Labour stalwart, J. A. Hobson, has been contending recently that there is no real difference between the aims and policies of the Liberal and the “Labour” Parties !

In an article in the Manchester Guardian (8.2.29) entitled “ Liberalism and Labour,” he advocates co-operation between the two parties on the grounds that the Liberal programme “presents a sufficient body of agreement with the adopted policy of the Labour Party to warrant thoughtful members of that party in looking favourably on co-operation.”

So, it would appear that although Mr. Hobson belongs to the Labour Party, “Hobson’s Choice” is not too well grounded. H. N. Brailsford and others agree with Hobson.

Now read the following extract from the article referred to :—

   The declaration of Labour in favour of “public ownership" of foundation industries, such as land, railroads, power, and banking, may seem at first sight a fatal obstacle to co-operation. But is there much substance in it? Labour does not propose to confiscate these undertakings. Its nationalisation would have to be financed by public bond issues, which for the most part would be taken in exchange for the existing share and debenture capital of the concern so “ nationalised.”
  Fixed interest would still be paid to the persons who had invested their capital in these undertakings. Would this differ appreciably from the Liberal proposal to leave the ownership of the undertakings intact, but to put them on a fixed interest or debenture basis?

Having now learnt what “ Socialism” is, I invite you to read what the Morning Post, in an editorial (11.2.29) has to say about this conception of Socialism —

  They (the Labour Party) have said a thousand times: “We do not believe in your 'capitalist' system yet they now propose to administer that “system,” and better, apparently, than those who do believe in it.
  We can understand the logic and appreciate the honesty of Socialists who seek office in order to establish Socialism; but we cannot understand the mental or moral position of Socialists who propose to take office in order to continue Capitalism. And we suggest to our readers to put these simple tests to. the professions and promises of our Socialist leaders. Do they propose to put Socialism in practice? If they do, do we want Socialism? If they do not, then why should we want them?

Isn’t this too cruel to the Labour Party! To be bombarded with the same ammunition by both the Morning Post and the Socialist Standard! No, I can’t believe those lines now!

Out Of Their Own Mouths.

On page 3 of the circular issued by the Labour Press Service great prominence is given to a statement regarding Unemployment Benefit (February 13th):—

THE HONEST UNEMPLOYED GET LESS 
CONSIDERATION FROM THE GOVERNMENT THAN CONVICTS DO.

The Government pays :—
£1 9s. 5d. a week to keep a convict in a Convict Prison.
£2 4s. 5d. a week to keep a convict in a Preventive Detention Prison.
£1 6s. 9d. to keep an offender in a Borstal Institution.
But it only pays—
17s. a week Unemployment Benefit to keep an honest workman who has the misfortune to be unemployed.
The Labour Party has repeatedly asked the Government to increase the amount of benefit for the unemployed.
The Government has refused all these requests, and has actually reduced the benefit of many of the unemployed instead of increasing it.

Then on page 4 we are informed how a Labour Government will tackle the unemployment “problem” :—

  Proper maintenance for the unemployed until re-absorbed.  Until they are re-absorbed into industry, a Labour Government would see that the unemployed are treated more humanely than at present. It would increase Unemployment Benefits to 20s. for men over 18, and 18s. for women over 18; it would raise the allowance for a wife or housekeeper to 10s. weekly, and the allowance per child from 2s. to 5s.; and it would make similar increases in the benefits of young workers.
  At the same time, by the discouragement of luxury spending and the direct increase of purchasing power in the hands of the workers, through better provision against unemployment, sickness, invalidity and old age, a Labour Government would increase the demand for staple commodities and powerfully assist the restoration of the chief industries of the country.

In other words, until the unemployed are re-absorbed into industry the Labour Government will pay to a man over 18 9s. 5d. a week less than it costs to keep a convict in a Convict Prison, £1 4s. 5d. a week less than it costs to keep a convict in a Preventive Detention Prison, 6s. 9d. a week less than it costs to keep an offender in a Borstal Institution.

Note how the Labour Government would “powerfully assist” the restoration of the chief industries of the country by disorganising some of the “chief industries”, of . the country—the “ luxury trades.” 

Providence, presumably, will be left the task of re-absorbing the workers in the luxury trades who would be thrown out of work by the application of the suggested remedy.

Sarcastigator.

News in Review: “Freedom’’ in Africa (1964)

The News in Review column from the March 1964 issue of the Socialist Standard

ABROAD
“Freedom’’ in Africa
By European standards, the recent mutinies in East Africa were very small beer. It was crushingly ironical that when the trouble started the new governments turned to the hated and despised British ex-rulers for help. If this proves anything, it is that ruling classes all over the world, whatever the colour of their skin, have common cause in the maintenance of their privileged position.

The troubles turned a spotlight upon Africa which is very disconcerting for the organisations which can always be relied upon to support any movement (especially in Africa) for national independence. These organisations have argued that the nationalist movements stood for freedom against the oppression of a foreign power. But how has freedom fared in the newly independent states?

Only five of them now make any pretence at being democratic. Ghana —the favourite example, of course—is now what the pro-Nkrumah Accra Evening News calls a one party democracy. Uganda has promised that it will also become a country where only one political party is allowed.

On all sides there is a developing African patriotism which is as pernicious and as nauseating as the Blimpishness which it ousted. Nkrumah and Kenyatta have both done their part in fomenting this patriotism; only last January Uganda’s Prime Minister said that there is what he called “an urgent need to cultivate national consciousness.”

This indicates what will happen when the workers of Kenya, Uganda and the rest start their first organised struggles to improve their wages and working conditions. They will be foolish to expect their new, African masters to take seriously the promises they made, in the days when they were opposing British rule, about freedom and human rights.

Capitalism laughs at such concepts. That is something which, we hope, the African workers will come to appreciate. It may even also get through to the people who like to call themselves progressive, the people who unfailingly speak up for Uhuru and other swindles which promise freedom and happiness but which only bring the customary repression and poverty.


Stiff Sentence
Reuter reports from Moscow that two former directors of a Riga department store have been found guilty of accepting bribes. Over here, that sort of offence against capitalism's rules of legal robbery would mean at the most a few years in prison. But in the so-called Socialist paradise it means something else. Both men were sentenced to be shot.


AT HOME
The Paul Report
There are many occupations under capitalism which will be quickly dispensed with under a Socialist administration. To list a few that will disappear, we have all banking and financial wizards and non- wizards, all military, naval and air force personnel, decorated and un-decorated, all ticket collectors on trains, buses, ships and air liners, all advertising, sales and business executives and, last but not least, lurking in the background of the commercial drapery, with soft lights and sweet music, the modern clergy.

After the publicity given to the Paul Report, this particular occupation of clergyman is in the news at the time of writing. The Liverpool Echo was recently lamenting the city’s shortage of clergymen and quoting from the Report that a ratio of one clergyman to 6,000 population showed Liverpool as . . . “one of the country’s worst hit spots ” . . .  Rather a novel way of putting it, like a shortage of coal in winter, or a shortage of water in summer!

The question arises—are these reverend gentlemen who wear their collars back to front, deal in holy water, and claim to be the earthly representatives of the supernatural, indispensable to society? The answer is that capitalism finds them an indispensable ingredient in fostering and perpetuating the myths of antiquity which Marx correctly described as . . . “ the opium of the people.”

So, whilst clergymen may be necessary to a ruling class anxious to control the brains of their wage slaves, we, the working class, could well travel along the road to our emancipation in a quicker, lighter way, freed from the phoney incantations of these modern medicine men.

The working class have no cause to lament a shortage of the “tools” their masters use against them, rather should they rejoice at any evidence that the religious pillar of capitalism is crumbling away.


End of R.P.M.?
As the general election draws nearer, the government tells us that every decision they make is a compound of courage, wisdom and humanity. That is why Sir Alec Douglas-Home described the move to abolish resale price maintenance as the grasping of a nettle.

It is not unreasonable to ask why they took so long to make up their minds, these wise, courageous, humane men. Only a few years ago the government gave R.P.M. its blessing; even now, it is not sure that price fixing will end. The proposed legislation will have plenty of loopholes through which even a moderately determined manufacturer will be able to slip and so continue to impose his terms on the retail market.

Perhaps the announcement was part of the usual pre-election handouts, like the raising of the school-leaving age. If the Tories can convince the voters that they are on the side of the consumer against the price-fixer, they may win some marginal seats in areas like the North and Midlands, where the price-maintained goods are so widely sold.

Of perhaps it was another move in the interminable fight against wage increases. Mr. Edward Heath, speaking to a Young Conservative conference last month, defended the decision to end R.P.M. on the grounds that: —

  . . . it had been found that full employment and an expanding economy brought rising prices.
  The Government believed the best way to deal with this problem was in the general context of competition between firms and in the retailing and distributive part of the economy. This was where resale price maintenance had had its effect. (Daily Telegraph, 10/2/63.)

Price levels are, of course, a vital factor in the bargaining which goes on over wage claims. No post war government has been able to halt the rise in prices, although all of them have promised to do so. Abolishing R.P.M. might be Douglas-Home's contribution to the wage battles of the next few years.

Meanwhile, the supermarkets lick their lips. Already they are slashing prices, pushing the little man farther and farther into the back street corners where his only sales appeal is that he gives “service." This is capitalism grinding on in classically ruthless style and the big supermarket tycoons, apparently, love it.

Probably a lot of workers will fall for the promises about the benefits which lower prices are supposed to bring them. There are plenty of people who regret the days when half-a-crown could buy a night out in the West End. A lot of the glamour rubs off these reminiscences when we remember that wages were then proportionately lower.

The fact is that anyone who has to work for his living always gets, on a general average, enough to keep him going. If prices go up, he gets a little more; if they go down, a little less. Sometimes this process may take a time to work out in the labour market, but in the end that is what happens.

This should always be remembered when we are talking about prices and wages. Unfortunately, it is more than likely that the ballyhoo over resale price maintenance will ensure that, not for the first time, the very fact that should be kept in prominence is obscured.

Spare a thought

The Sultan of Zanzibar, after fleeing to this country from the coup which deposed him, was reported to be in dire penury. He had to leave his posh hotel and to put up some of his retinue in a Salvation Army hostel. But the cruellest cut is, apparently, yet to come. The Sultan will now, said his private secretary, “. . . have to earn his living.”

Now the ruling class are never tired of telling us about the nobility of labour and about how good it is for us to rely upon our wage for our living. Yet when one of them is deprived of his investments and is faced with becoming one of us, their reaction is sympathetic horror. A flash of insight, this, into what our masters really think of this social system—and of the people who are foolish enough to let it continue.

BUSINESS

Fiftieth Birthday

Nineteen sixty-three was the fiftieth anniversary of the New York stockbroking firm of Merrill Lynch, Pierce Fenner and Smith.

This firm recently announced its results for last year; operating income of $170 millions, net profit of $18 millions, 137 offices in the U.S.A. and 17 outside—including one in London. And an item of expenditure, on advertising and “public education," of $4-6 millions.

In the stuffy world of stockbrokers, Merrill Lynch have long been something of an unconventional outfit. For some years they have been trying to float their own shares on the New York Stock Exchange and have been prevented only by the Exchange's constitution. When they opened their London office three years ago they upset all the conventions over here by advertising their services in the press—something which, they say, has paid off handsomely.

It is by a typical piece of chop-logic that the Stock Exchange, although it allows its members to deal in the shares of companies whose advertising campaigns may be nothing more than dishonest, frowns upon those same members advertising themselves. Well-cared-for stockbrokers can apparently see nothing wrong in a tobacco company tempting its customers to ignore the evidence which links smoking with lung cancer, but they can see everything wrong in a broking firm tempting those same customers to invest in the tobacco companies through them.

Merrill Lynch's ads were aimed at the small investor—indeed, they have a rule that they never turn away any customer, no matter how little he has to invest. They thus have an interest in fostering the delusion that a worker can get rich by risking his paltry savings in a share gamble rather than by using them in some other way.

This is a useful delusion for the capitalist class. A worker who invests a few pounds usually thinks that he has a stake in capitalism and is, therefore, that much more servile and uncritical of the anomalies and inhumanities of the system. He will think that way even though his chances of making a significant profit from his shares are infinitely less than those of losing his lot in an unwise speculation.

Who, then, is likely to make a profit on the Stock Exchange? Take a look at Merrill Lynch’s balance sheet and you will see.

The Big Bang (1986)

From the December 1986 issue of the Socialist Standard

So that was the Big Bang was it? What revolutionised the Stock Exchange and shook the City actually made no difference to most. Workers woke up one morning to a deregulated Stock Exchange, but would not have had much time to ponder the significance of such a revolution on their lifestyle before they had to get to their work or their place in the DHSS queue.

But of course, such matters must be important mustn't they? After all, it's on the news every evening, after the royal item and before the Granny-parachuting-for-charity, we get the summary of the share price fluctuations, and hear how the Pound struggled, rallied, finished weakly. As one who after a usual day's work (struggled, rallied, finished weakly) cannot see the significance of it all. I sent off for the Stock Exchange's glossy pamphlet An Introduction to the Stock Market. Thinking that "bull" was what economists talked about (rather than a type of market). I needed to see what all the fuss was about.

The cover had lots of photographs of the type of people who, presumably, own shares: all ages from smiling babies to smiling OAPs; all occupations from cooks to builders. welders to fishermen. They even managed to get half-a-dozen different ethnic groups represented on the pamphlet cover, which is about five more than are effectively allowed on the trading floor of the Stock Exchange, to go by recent reports.

Of course it's the same sort of rubbish that we get on TV with every advert for the TSB flotation, the idea that becoming a capitalist is as easy as wearing a bowler hat, everyone can do it. It's a popular notion — borne out by the oversubscription for TSB — that we can drag ourselves free from the varying degrees of poverty and pressures of working-class life. There is nothing wrong with wanting to escape that, but there is everything wrong in believing that a handful of shares in the TSB will free you of anything but a few hundred quid.

It is a popular notion because people want it to be true but it has no basis in fact. Research by London Weekend Television shows that the City is not full of self-made men (or women). Those who reach the top in the City still come, predominantly, from a privileged background. Indeed the class division between rich and poor, owners and non-owners did not end years ago with the nineteenth century, nor the nationalisation of the 1945 Labour government, nor the privatisation of the present government and certainly it will not end with the next stock market flotation (there should be one soon), nor with the next boom period (there should be one sometime), nor with a next Labour government.
The situation today has changed little:

• the top one per cent own some twenty per cent of the total wealth in Britain, which is as much as the bottom seventy-five per cent;
• the 20.000 millionaires in Britain own more wealth than half the population put together;
• the top six per cent enjoy forty-four per cent of unearned income, while two-thirds have none.

(They didn't tell me that in the glossy brochure. I had to look elsewhere.)

The fact that some of those who work in the factories now have a couple of shares in British Gas tucked under their pillows, and a fifty pence reduction in their gas bill, will not upset the factory owners.

But isn't the Big Bang going to change all that? Isn't it going to sweep away the inherited privilege of a lucky few, in favour of real rewards for those with courage, enterprise and a will to work hard? You know the sort of person, a cliche that only exists in the head of a Tory Party speech writer he (not she) is pulling himself up by the bootstraps and pulling in his belt, he's got his nose to the grindstone, one foot on the ladder and is on his bike . . . Well, "yes" is the answer if you have eyes to read the brochure with; no is the answer if you also have a brain to think with. Far from opening up the City to the individual and the entrepreneur, the Big Bang means the deregulation of exchanges and emphasis on high technology, allowing very complex and very fast transactions of commodities all over the world. In the USA, this "programme trading" has produced much larger and more frequent swings in the markets. Judgements are decided by short-term market fluctuations. not on longer term evaluations like the state of the economy in general. Consequently, small investors cannot weather the large swings in the market without large financial backing. It's the big fish that remain.

But regardless of the fluctuations of share prices, the legal business of exploitation is not just a matter of gambling on the Stock Exchange — buying and selling at the right times and the right prices —where you are rewarded for your "courage". All you need to do is sit on your shares and spend the money as it comes in. You don't need talent or guts, just a lot of money. Indeed, a BBC Nationwide news programme a few years ago had an item about a dog (presumably they could not find a parachuting grandmother that day), who placed his paw on the Financial Times and chose the shares for his master. The dog was a millionaire. And his owner looked about as happy as a dog with two million pounds. You can do it too. Try it at home - all you need is a dog and somewhere in the region of £100,000. A trained monkey could do it. Even Gerald Grosvenor (the Duke of Westminster — two billion pounds and two O' levels to his name) can do it.

Most capitalists are the same, they get someone else to do the little bit of work of buying and selling shares. Most hardly even see the Stock Exchange, let alone the factories. land or offices they profit from.

Quite simply, the City cannot be opened up to everyone. As my brochure says (stuck away in the last paragraph on the bottom of page nine), your broker will "tell you honestly if your personal circumstances are such that you would be ill-advised to become an investor". Capitalists need workers but we don't need them. They couldn't tolerate a builder or a manager or a secretary retiring at the age of thirty to live off the proceeds of their work. They need to squeeze as much as possible out of you, from when you are strong enough to work until you are old enough to drop. The rest of your life is your own.

Unfortunately for this scheme of things, capitalism never runs smoothly for very long. The deregulation which has already started has produced some blatant examples of inflated salaries in the City. At a time when wage councils are being abolished and while one quarter of full-time workers in London are below the poverty line, the news that a few miles away in the City salaries can touch £lm cannot help the government's pleas to workers for wage restraint. At least the Queen has set the right example to Britain's greedy workers by accepting a pay rise below the rate of inflation, in the process boosting her earnings last year from £3,850.000 to over £4million.

Then we have the interesting sight of Thatcher criticising the excessive salaries. The champion of the market-place, outflanked by the uncontrollable nature of the system she supports. For capitalism, which periodically bares its "unacceptable face" that no cosmetic can hide, is the best ever advert for socialism.

We could have a society where personal consumption of wealth will not be restricted by your personal circumstances and where production of wealth will not be restricted by the requirement of a surplus called profit.

Socialism will take the information and communications technology that today enables vast amounts of useless information — like market fluctuations and share prices — to circulate the world in seconds, every second, and will liberate its potential for a society based on production for use, as we liberate ourselves in a movement for World Socialism which makes the Big Bang look a damp squib.

Brian Gardner