Economic nonsense (1971)

Book Review from the June 1971 issue of the Socialist Standard

What Economics is About, by Michael Barratt Brown. Weidenfeld and Nicolson. Paperback. £1.

Michael Barratt Brown has written a textbook on economics mainly for the trade unionists he teaches in the Extramural Department of Sheffield University. Brown is a frequent contributor to Tribune and claims that his book “can be distinguished from most economic textbooks by its inclusion of Marx’s economics in the main stream of economic thought”. If it is to be judged on this basis, the book fails since Brown has no understanding even of so elementary a concept in Marxian economics as the distinction between use-value and exchange-value. But to be fair he only follows the Russian and East European economists (and especially the exiled Czech Ota Sik) who have twisted Marx’s Labour Theory of Value into a theory of pricing for “socialist" (read “state capitalist”) society.

Brown believes that production for the market is compatible with Socialism, an idea Marx rejected as absurd. Socialist production would be solely for use. In other words, products of labour would not be commodities with an exchange-value or price. They would simply be use-values, useful things produced by human beings to satisfy their wants.

Apart from this false claim to be partly Marxist, Brown’s book is not a bad introduction to the sort of economics that is taught today. It has a good criticism of the usual assumption that under capitalism the consumer is king:

   What then is left of the economist’s model of the market economy under conditions of large-scale modern industry? Wants are not apparently given but created by those who supply them; incomes are distributed as much according to inheritance as according to performance, and wealth and poverty tend steadily to polarize; free competition is replaced by monopolistic positions at home and cartels abroad; prices are fixed rather than emerging from the free play of market forces; profit results from monopoly as much as efficiency; capital is concentrated in giant international companies which themselves determine the allocation of the world’s resources; labour follows the concentrations of capital as best it can. In this crude and summary picture precious little is left of the market as the reconciler of consumers’ needs and producers’ power.

It also has some useful facts and figures. In 1966 the value of property vested in the State was £34,000m, but the National Debt was £31,000m. which means that most State property is mortgaged to private capitalists. Again, “not much more than 5 per cent of the adult population own capital from which they can derive a current income” (“the richest 5 per cent of the population owned in 1960 about 75 per cent of the total personal wealth and drew 92 per cent of all property income”), and about 10 per cent of adults in Britain own all property

Another 45 per cent own some capital which consists usually of a house and some small savings for the future in an insurance policy or a savings bank. The standard of living for most people therefore is based on their weekly or monthly wage or salary.

Adam Buick

Getting means to survive (1996)

Book Review from the July 1996 issue of the Socialist Standard

Modern Environmentalism: An Introduction by David Pepper (Routledge, 1996)

This textbook for students provides a comprehensive survey of the ideas of those who are concerned about environmental problems.

The coverage ranges from the sinister Dark Greens and so- called "Deep Ecologists", with their anti-humanist (and anti-human) philosophy and their irrational Nature-worship, at one end. through other less unreasonable "ecocentrics" who imagine that Green values can be imposed on capitalism (the Green Party), and the reformist "technocentrics" who believe that technological fixes can solve or at least contain the problem within capitalism (the official Establishment view), to, at the other end, people like ourselves who hold that capitalism, with its production for profit and its built-in drives to cut costs and accumulate capital, is the cause of current environmental problems and that humans won’t be able to achieve a sustainable relationship with the rest of nature until it is replaced.

All these views are discussed and compared, including ours (in a section entitled "The moneyless economy and eco-socialist society").

One point though. Pepper implies that it is an exclusively "ecocentric" position to hold that the things we perceive don't exist as separate, independent things but are only parts of an interrelated and interacting universe which alone has an independent existence ("holism", as it is now called) and that everything in the universe is composed of the same "stuff’ or material ("monism”).

It is true that this is a view held by many ecocentrics, but generally in some mystical form. In a non-mystical form it has been the view of Marxian socialists since the time of Joseph Dietzgen in the last century who expounded it under the name of "dialectical materialism" (not to be confused with the official ideology of the former state-capitalist countries which had the same name).

It was in fact because ecology is a science of interrelationships that socialists have always realised its significance. Indeed, because it emphasises the importance of the way living things get their means to survive it is the application to the world of nature of the same approach that Marx's materialist conception of history takes to human society; it is a materialist conception of the world of living things. As such it has nothing in common with the mystical nonsense with which some Greens and ecocentrics have surrounded it. 

Adam Buick

Economics is bunk (1993)

From the July 1993 issue of the Socialist Standard

Want to know how to pass the GCSE Economics exam? Then this is what you must do. Ignore the facts, blinker your mind and repeat the following parrot-fashion: all resources are scarce and always will be; human wants are unlimited and so can never be satisfied; without a class of entrepreneurs nothing can be produced.

In case you think we might be exaggerating, have a look at any course textbook. Here, for instance, is what I. L. Hobday lays down in the first lesson of his GCSE Economics in the Pan series "The Complete Guide to GCSE Exam Success":

  Unlimited consumer wants are greater than the quantity of factors of production (land, labour, capital and enterprise) available to produce goods and services.

He goes on:

   Consumer wants are unlimited. This means that consumers (i.e. anybody who buys or purchases) want food, shelter, clothes, etc. These wants are unending. For instance a consumer may want food, then more food and better food. Goods and services cannot, however, be produced in unending amounts because the factors of production (or resources) are themselves limited in supply. Therefore goods and services are scarce (which means limited in supply).

Whatever you do, don't let common sense interfere at this point and make you challenge the unsupported claim that "consumer wants are unlimited". Unlimited? This would mean that each and every one of us wants to consume the whole universe, a proposition that would be well-placed to win a prize in any competition for absurd statements.

Fake scarcity
The truth is, of course, that human wants are not "unlimited". "unending" or "insatiable". In practice what we want is relatively limited and quite reasonable. We want decent food, clothes, housing, household goods, travel facilities, health care and entertainment. What most people want is no doubt greater than what we are allowed to consume today as a result of the restrictions imposed by the size of our wage packets or salary cheques, but this is not at all the same as saying that our wants are unlimited.

The same goes for the claim that resources are scarce. This is just as absurd. Of course if wants really were unlimited then resources will always be insufficient to satisfy them—by definition. But this tells us nothing about the real world, about whether or not resources are in practice sufficient to satisfy people's actual—and relatively limited— wants. 

All the studies that have been done regarding people’s food needs have shown that resources are more than enough to meet them. And the same result can be expected to be reached if studies were done about the amount of clothes, housing, etc that people wanted. In any event, it is not good enough to lay down as a dogma—as the GCSE course does—that resources aren't sufficient for this. Facts to back up such a claim ought to be produced, but none of the economics textbooks ever do this.

And don’t challenge either the peculiar definition of "scarcity" as meaning what is "limited in supply”. Most of the resources needed to satisfy our wants, except perhaps the air we breathe and the rays of the sun, are limited in supply in an absolute sense, but that's not the same as saying that they are "scarce”, i.e. in short supply.

Just the opposite is the case. In relation to people's actual reasonable and limited wants, most resources are not in short supply, but are or could soon be made available in adequate quantities, in fact in more than adequate quantities. But. if you want to pass your GCSE Economics, you mustn’t mention this.

False factor
Pan Books' “Complete Guide to GCSE Exam Success" also tells you want to write about the "factors of production". Basically—we’re talking about the real situation now. not what you have to repeat to pass—for production to take place two “factors” are necessary: materials that originally came from Nature (“Land”) and the mental and physical energies and skills of human beings (“Labour”). The combination of these two is the source of all existing (and past) wealth. It is legitimate to distinguish a third “factor”—human-made instruments of production, which conventional Economics persists in calling, misleadingly, “Capital”—but only as long as it is recognised that this is derived, and can only be derived, from a combination of the first two.

But to pass your GCSE Economics you have to agree to the invention of a fourth “factor” called "Entreprise”. This, you must assert, is the key factor without which the others are useless. You must copy Hobday and write:

   Without the entrepreneur the other resources have no economic importance—they need to be brought together and organized for production.

If you refuse to sing this hymn of praise to the captains of industry and business men and women, then you can say goodbye to passing your GCSE exam. The last thing you must do is to ask whether, perhaps. Labour (which Hobday admits to be “the mental and physical human effort involved in the production process”) could not organise production on its own, without the entrepreneur.

Because if you did, you might come up with the common sense answer that, even today under the profit system, the actual work of production, from start to finish and from top to bottom, is carried out by workers applying their mental and physical energies to materials that originally came from Nature (either directly or as instruments of production fashioned from Nature by earlier generations of workers). All an entrepreneur does is look out for opportunities to make a profit and line their own pockets out of the wealth produced by Labour.

So, if you rteed to pass the GCSE Economics exam to have a chance of getting a better job. our advice is: write down the crap the examiners want to read—but don't believe a word of it.

Adam Buick

Hurrah for capitalism! (1965)

Book Review from the March 1965 issue of the Socialist Standard

An Introduction to Economics by J. C. Powicke and P. H. May, (Arnold.)

At school we were all taught a spurious brand of history, but formal instruction in economics has only recently appeared in school curricula. It is thought convenient that the average worker should take a pride in the history of Britain and the British Empire, but a knowledge of economics is considered unnecessary for most of us. The workers should leave this subject to the experts who will be sure to inform them when it is imperative that they refrain from wage claims, accept a lower standard of living, take up arms and so on. However, having a naive distrust of such experts, I recently attempted to correct this deficiency in my education by reading An Introduction to Economics.

The authors are economics teachers at Chichester High School and their book is intended primarily for secondary school-children taking their “O" level in this subject. The tone of the first few pages is certainly encouraging:

 In economics we must always be scrupulously careful about method. We must begin by collecting all the relevant facts that are obtainable, analyse them carefully and then, and only then, try to draw our conclusions. We may not like our conclusions, they may be very uncomfortable ones, but if our study has been correct they will provide the only sure guide to the working of our economic organism.

Certainly we would not quarrel with this but, unfortunately, these brave words soon evaporate and the rest of the book is composed of the most shoddy analysis and glib conclusions that would not give any capitalist a moment’s indigestion.

The broad picture sketched of present day society is one of rosy affluence where the entire community benefits from its co-ordinated efforts. Although it is stated that the two factors of production are Labour and Capital, it is never explained that this capital is controlled by a minority who have no need themselves to work, whereas the vast majority of the population is faced with no alternative but to sell its labouring power as wage labour. Constant stress is placed on the tenet that capital is at the service of the whole community, who control it jointly. Despite the fact that most of the children who read this book will be members of the proletariat, unjustified use of the first person plural invariably accompanies the mention of capital.

For example:

    Whenever any goods are produced we can choose two ways of using them—we can use them either to satisfy our wants directly or else we an put them on one side for future use. . . . In fact, there is often a considerable difference between the sort of goods which we consume and those we set aside. A great deal of the latter type consists of such things as industrial buildings and machinery. In other words some of the product is designed to add to our stock of capital, and some is designed for consumption, (our italics)

Now and again, however, a glimmer of truth—which might induce an intelligent youngster to question some of the authors' other assertions—can be discerned. Thus, in a section dealing with the decline in competition, they write that “the growth of large-scale production leads to the concentration of an increasing amount of the community’s capital in the hands of relatively few firms.” Clearly such a statement as this cannot easily be reconciled with the suggestion that we are involved in the manipulation and organisation of our capital.

". . .  the criterion of economic efficiency must be the degree to which wants are satisfied out of the use of the available resources of a community.” Because, under capitalism, production is geared to profit and not to the satisfaction of people’s wants, the immediate reaction to this sentence is to conclude that it implies a criticism of capitalist society. But the poverty of these professional economists’ thought is well illustrated by their later amplification of this point “Economic efficiency can be defined as the ability to use the available labour and capital to give the most complete satisfaction of wants . . . ” Thus they demonstrate that all their ideas are hemmed in by the strait-jacket of bourgeois economics; they cannot stretch their imagination beyond the narrow horizon of capitalism. Clearly it never occurs to them that the anarchy of capitalist production breeds inefficiency and that to talk of efficiency in the context of capitalism is to contradict oneself.

It is interesting to note that no reference to Marx is made anywhere in this work although even Malthus is considered worthy of a fleeting comment. Some of the writers' profundities seem to have been devised deliberately to promote misunderstanding. For example, in chapter 9 they maintain that “our income is the value of our product.” If our income represented the value of our product, how could profit possibly be accounted for? They have conveniently overlooked the fact that surplus value, created by the wage-worker, is acquired by the capitalist because he purchases the former's labouring power.

In the final chapter a summary of the present situation is made:

   There are no inherent weaknesses in the British economy . . . responsibility for the success or failure in solving Britain’s economic problem rests squarely on the shoulders of Parliament. In this instance. Parliament’s first job must be to instruct the community in the nature of the problem and its remedies.

They are incorrect on virtually every point they make. Britain’s economy, like that of the rest of the capitalist world, is riddled with inherent contradictions which no amount of palliative treatment can cure. Only one solution is possible—the establishment of socialism by the working class. This task must be carried out by the proletariat itself; they cannot expect the parliament of the capitalist class to achieve it for them.

But the final comment must be left to the authors themselves. Having outlined the difficulties which they consider Britain is facing, they ask “If Britain’s economic problem can be explained in this way why has it proved so intractable?” Why indeed?

John Crump

Trade Unions (1970)

Book Review from the March 1970 issue of the Socialist Standard

Trade Unions, by Peter Lane. (Bastford. 18s.)

This book is supposed to be a simple history of trade unions for use in secondary schools.

With illustrations on nearly every one of its 90 pages, it traces the rise of trade unionism in Britain from the early days of small craft and local unions to the Trades Union Congress of today. Lane merely expresses the orthodox role of the TUC today: as a body more concerned with the well-being of the British (capitalist) economy than with the interests of the workers. He manages to avoid any mention of unofficial strikes.

He also gives a misleading idea of the views of Robert Owen and William Morris. Owen is made out to be a militant syndicalist who believed the unions should overthrow capitalism in a general strike and then themselves run industry. Morris, on the other hand, is supposed to have held that trade union control of industry “might be won peacefully’’ and to have founded, along with Ruskin, the so-called Guild Socialist movement.

Lane would have been nearer the truth if he had reversed the roles he assigned to Owen and Morris, only neither of them advocated syndicalism or trade union control of industry. Owen stood for a federation of producer co-operatives (“the cooperative commonwealth") to be achieved gradually and peacefully. Morris was a Marxian socialist and stood for the common ownership and democratic control of industry to be achieved by revolutionary political action (which he believed would most likely be violent).

It should not be too much these days to expect accurate facts to be given to schoolchildren.

Adam Buick