Economics Exposed: Ownership and control (1987)

The Economics Exposed column from the June 1987 issue of the Socialist Standard

The whole of human history has consisted of a series of social systems. Each of these social systems has been seen by most of the participants as a way of meeting human needs, by producing and distributing wealth. Those who have been prominent in the introduction of new types of social relationships have claimed that their movements were a step forward for humanity, a dramatic improvement in the organisation of wealth production.

In reality, however, we can now look back and understand that in each case what was really happening was that a particular class of wealth owners or would-be wealth owners were in fact pursuing their own interests, as a class, and simply dressing up this interest as being "the public interest". This was more than ever the case with the rise of the capitalist class in the seventeenth, eighteenth and nineteenth centuries. At that time, the conflict was between the needs of the "modernising" mercantile and manufacturing interests on the one hand and the landed aristocracy on the other.

The key choice facing humanity in the twentieth century, in contrast, is that between capitalism and socialism as systems of society. The socialist movement is unlike all previous movements for change. It emerged over the past hundred years as an expression of the interests of the working class. And unlike all previous classes, the working class forms a vast, dispossessed majority across the world which has no interest at all in developing any "property" base of its own. Indeed, any utopian schemes to turn all workers into small-time capitalists themselves, are in fact doomed to failure for just this reason; the survival of workers within capitalism depends on selling, at the best price possible, the only resource which, by definition, a wage or salary-earner can control — our own ability to work.

The interests of the majority class in society have therefore become identified more and more obviously with the destruction of all property relationships, rather than with their perpetuation. Even after decades of reformist theory and practice from both Tory and Labour parties in post-war Britain, for example, the existence of capitalism still guarantees that wealth becomes increasingly concentrated in the hands of a minority, as we shall see below.

In this column last month it was stated that this minority "possess” the working class as part of their assets. This reference to possession must, of course, be interpreted loosely, since capitalism has no use for the customs of ancient Greece and Rome, under which the wealth producers were the permanent property of slave-masters. Today, when employers invest in the productive power of wage-earners they still, like their ancient counterparts, enjoy the right of ownership over all wealth created by those wage-earners and yet they are not responsible for housing or feeding their wage-slaves outside any specific periods within which they are contracted to be employed.

What then, are the key differences between capitalism and socialism as economic systems?

1. Ownership and control

Capitalism is the dominant system of society throughout the entire world today. In every country, a minority class own and control the productive resources. Farms, factories, industrial plant and machinery, transport and communication networks; all of these are effectively in the hands of a small minority and controlled ultimately for their benefit, rather than for the free use and benefit of all. According to the official statistics published in the Social Trends survey (HMSO, 1987) the most wealthy ten per cent in Britain in 1984 owned more than half of all marketable wealth. This minority ownership and control of society's productive resources of course takes various forms. In the case of nationalised industries, the former shareholders now enjoy regular interest on the state bonds they were compensated with, so they continue to profit from the wealth created by the workers just as they did in the days when they were explicitly the owners. And in the case of Eastern-bloc style state control, or of "nationalisation without compensation". we see a new class of state bureaucrats, fulfilling the role of owning, controlling and profiting from production within that sector of the world capitalist system.

Socialism, by contrast, means the common ownership and democratic control of all productive resources. Factories and farms would then become the common heritage of all humanity, no more hived off or labelled with title-deeds than is the air we breathe, and freely accessible for the use of all.

2. The motive of production

On the socialist basis of placing these resources firmly in the hands of the human race as a whole, rather than allowing them to be owned and controlled by a minority group, it would then for the first time become possible for us to change the basis on which wealth is produced. At present, wealth production is likely to take place only if the goods and services which would result are likely to be profitably sold for cash on the world market. The level of production of everything across the world today is therefore tailored to meet market requirements rather than human needs.

Because the primary aim of production under capitalism is the generation of profit and the accumulation of capital, rather than purely to meet the needs of humanity as safely and comfortably as possible, it therefore follows that human life itself almost always comes a poor second to the pursuit of profit, as these two clash daily within the present. global social system. Examples of this abound, so here we present just one recent example, of the ironically named Herald of Free Enterprise:

Commercial pressures have prevented design changes in roll-on roll-off ships which might have saved the Townsend Thoresen ferry which sank off Zeebrugge harbour last Friday . . . Captain Nic Ruthford of the International Federation of Ships' Masters Associations, which has long expressed worries over Ro-Ro safety, said he would press for all Ro-Ros to be redesigned. He said: "The big problem is that one owner is not going to make expensive alterations that would put him at a disadvantage compared with his competitors until he absolutely has to".

(The Independent,10 March 1987)

Just like the millions who die each year of starvation or hunger-related disease while politicians dream up schemes for cutting back on production to restore profit levels, or for destroying the so-called "surpluses", likewise those who died in the ferry disaster were also sacrificed on the altar of profit.

3. The lives of the majority

One of the most important myths of capitalist economics, which must be exploded, is that workers are free-acting, independent agents, each "seeking their fortune" as best they can within the economic competition of the capitalist jungle. In fact, it is a key feature of the economic system we currently live under that the working-class majority are forced, through economic necessity, to take their own ability to work on to the labour market to be sold as a commodity. As a result of this, we are compelled to subjugate all of our human qualities of individuality and freedom. to give up our own creative needs and impulses, to cut out any individual style we may have, and present ourselves as neatly packaged and reliably productive machines for the consumption of our employers.

Consider, for example, the following passage from an official report which was attempting to persuade international employers to invest in British workers, by stressing the exploitative potential of what is on offer:

Not only does Britain's work-force perform well, its costs are remarkably low for what is one of the world's most highly developed countries. US Department of Labor figures show that British wage rates are among the lowest in the Western world. In addition, "on costs" (i.e. those labour costs which are additional to wages, such as state social security schemes and the financing of voluntary sick and pension schemes) are very low in Britain . . You will find the British work-force of today disciplined, motivated, skilled and ready for work. 

(BRITAIN, The Preferred Location, prepared by the Department of Trade and Industry, and the Central Office of Information. 1985)

It would appear, from such brazenly degrading statements, that the British ruling class believes they can talk about workers "behind our backs" without our knowledge. Perhaps they were forgetting that mass literacy has been predominant in Britain for some time.

To summarise, then. Past history has been a series of conflicts between classes, with each successive system serving the needs of a different minority class. Socialism means the total abolition of all property relationships, and is therefore the solution to the problems currently facing the working-class majority. Under capitalism, a minority own and control productive resources and production is geared to their profit. In socialism, productive resources would be owned in common by the whole of humanity and democratically controlled, so that production could be geared to human needs rather than the needs of the market. Under capitalism, the lives of the majority are dominated by the need to survive by selling our working ability on the labour market. The misery which results can only be ended by socialism, in which human beings would cooperate together consciously, to produce wealth with the sole aim of meeting human needs themselves.

Next month, we shall examine the precise mechanism by which capitalism functions, the exploitation of wage-labour.

Clifford Slapper

Economics Exposed: Do we need the market mechanism? (1987)

The Economics Exposed column from the September 1987 issue of the Socialist Standard

Defenders of capitalism claim that the market mechanism is the only way of distributing goods across a modern global society. Without profit and loss, without buying and selling, they say. how could we organise production? If all goods and services were available free, as they would be in socialism, then how could we make decisions about what to produce and when, how and where to produce it?

At the moment these decisions are taken on the basis of reducing costs to a minimum, in order to maximise profit. The money system allocates values to every conceivable useful or useless item, allowing us to make comparisons between options, always on this basis of reducing cost. Cost, in turn, relates to labour time and hence the attempts of major companies to make "rational" capitalist decisions also show their results in the dole queues.

Socialism will do away with this whole system of relative values and with the price tags which express them. Instead, in a system of production for use. not profit, the focus will be on whether a given production process is geared to serving human needs. Does it result in meeting human requirements? In many cases, people may well prefer a form of production which is less intensive. cheap and "productive" in capitalist terms. In a socialist society, the democratic framework would be developed for such choices freely to be made.

And what about the question of consumption? Champions of the market system tell us that goods have to be supplied in response to how people are "choosing" to spend the paltry pocket money referred to as wages. In socialism, goods will still be supplied in response to people's expressed preferences, and these preferences will still be made ultimately clear by what people choose to take from the shelves of the stores. The difference would be, however, that in a sane society such choices would be made freely rather than under the artificial conditions of scarcity and effective rationing which cloud and distort the picture today.

Modern technology has been used already to develop stock control methods which could usefully be adapted for use in a socialist system of distribution. In a number of large chains, when an item is bought and passes through the cash desk, it is automatically recorded as sold and this information is relayed by computer to the department which deals with ordering further supplies. This can even be organised so that the level of output in a factory is informed by the same information. Once a certain amount of stability has been reached in the levels of "demand", a self-regulating system can develop in which all production levels are constantly monitored and are tied directly to the levels of consumption observed at local stores. This also, of course, encompasses the issue of personal choice, as a range of goods would be in those stores, and the popularity of each would be reflected in the computerised information received.

The existence of a buying and selling system. of money and of profit and loss, hinders and complicates the process outlined here. In contrast, a socialist system of free access would allow needs to be catered for freely in this way. Likewise, the existence of competition between productive units and between distribution outlets makes a mockery of any attempt to efficiently deliver, to humanity as a whole, the best that can be provided by modern production methods. Socialism will involve using co-operation on a world-wide scale to quantify human needs in real terms (not "money terms") and to provide for those needs swiftly.

Clifford Slapper

Economics Exposed: Rich or poor (1987)

The Economics Exposed column from the October 1987 issue of the Socialist Standard

In the last century, William Morris summed up the economics of capitalism simply but wisely, by saying that there were rich and poor, and that the rich were rich because they robbed the poor. That honest statement of the power relationship which lies at the heart of present-day society was worth more than the hundreds of pages of economic claptrap which have tried to persuade us that capitalism is inevitable (even though it has only occupied the most recent fraction of human history). And yet today, a hundred years later, it is often claimed that real class division between rich and poor has become a thing of the past. Thanks to pension funds, social reforms and wage rises, we are told, everyone now has a chance to "make it". Well, who are the truly rich in Britain today, and what chance do the rest of us have of becoming that rich ourselves?

In answering the first of these questions, it is important to bear in mind that wealth and poverty are relative, social concepts. To have owned a television some decades ago may have suggested some relative status or prosperity, whereas today it would by no means disprove that someone was in poverty. Henry VIII may have been one of the richest men of his age. but he still did not enjoy modern central heating (or drive a Rolls Royce). If you want to decide whether you are in poverty. then ask yourself two questions: "Am I fully in a position to enjoy the fruits of modern technology, such as good food, secure housing, extensive travel and so on, without ever having to scrimp, save, worry or settle for second best? And are there others, living in the same society, who are able to enjoy better food, housing and so on than I am, purely and simply because they do not share the same official "poverty" label as I do in this society?"

According to a major survey taken last year (British Social Attitudes, publ. Gower). 70 per cent of British people describe themselves as “working class ". But in fact, an even greater percentage, over 90 per cent of the population, are in the class which has to work for a living, to sell our abilities on the labour market in order to survive. Those who do not have to are certainly rich, as they have the resources at their disposal to rescue them from the pressures and indignities of wage — or salaried work. Such people may be termed "capitalists" as they own and control substantial capital, but the press tend to spare them the trouble of having their monopoly of capital highlighted too much, and give them instead a great range of other names: industrialists, entrepreneurs, captains of industry, business-people, members of the "business community", financiers and bankers, commercial magnates and investors. Well, socialists might also be tempted to give these people a great range of other names. However, we forgo that temptation, since our case against capitalism is based not on any personal hostility towards such people, but on the knowledge that under their system (which the majority still support) the interests of the working-class majority can never be met.

When we speak of the minority who are genuinely "rich", we are referring to people like David Sainsbury, whose £1 billion provides him with over £30,000 per day in dividends alone. People who could quite easily afford the cars advertised earlier this year for £150,000 and £275.000 (Sunday Times, 8 March 1987). Individuals like Robert Maxwell and Gerald Ronson whose monopoly of capital to the value of half a billion each provides them both with unearned incomes of approximately £1 million each week. Let us now move on, however, to some facts which will help us to answer the second question, what chance do the rest of us have of escaping at all from the poverty of our working lives?

Last year, an LWT television series called Fortune dealt with the subject of wealth in Britain, and the information was summarised in New Society, 22 August 1986. The research was specially carried out by Professor Bill Rubinstein of Deakin University, Australia and Professor Anthony Shorrocks of Essex University. Some of the findings to emerge were as follows:

1. The richest 43,500 people in Britain today, or about one thousandth of the population, own between them 7 per cent of all wealth, which is nearly twice as much as the wealth owned by the whole of the poorest 50 per cent of the population together. These 43.500 have individual fortunes of £740,000 upwards.
2. The richest 5 per cent of the population (about two million people) possess between them 41 per cent of all wealth. Even people with as "little” as £75,000 to their name would belong to this group, rather than to the remaining 95 per cent of the population who therefore suffer relative poverty.
3. A scientific study was made of all those who died in 1984 or 1985 leaving a million pounds or more. It was found that 68 per cent of these modem millionaires had parents who were "aristocrats, businessmen or farmers" and a further 12 per cent had parents who were described as "higher professionals". 43 per cent of millionaires had been left over £100,000, and exactly three quarters of them were found to have inherited at least £10,000 in their earlier days (and such sums would have been worth far more then than now)! A study by C.D. Harbury conducted in the 1950s and 1960s had found, similarly, that 58 per cent of those who were leaving £100,000 or more had themselves been left at least £50,000 by the previous generation.

All of this indicates just how little has changed in this respect since the days of William Morris. However, one point should be added. Even in the unlikely event of capitalism being so reformed as to make inheritance of little significance (and such a change is made particularly impracticable by the fact that this economic system is founded on the successive accumulation of capital), still the system would fail to meet the needs of the majority. The rich would still rob the poor, even if each generation had to jump through hoops, throw darts at each other or draw lots to see whose turn it was. The only solution is to replace this wage labour/capital relationship with social co-operation to meet needs. And the flexibility of human behaviour makes that prospect as workable as it is compelling.

Clifford Slapper

Economics Exposed: The great money trick (1987)

The Economics Exposed column from the July 1987 issue of the Socialist Standard

The most relevant response to debates about "economics" in the current era is to point out that the present global system of production is based on the legalised robbery of the majority by the minority. As long as the wages system exists, therefore, the needs of the majority cannot properly be met, as production will remain geared to the needs of our employers rather than to the needs of humanity as a whole.

This socialist assertion about the economic system which exists throughout the world today can quite easily be shown to be correct. A recent survey by Management Today has shown that the top hundred British companies have all increased the value of their shares by at least six hundred per cent over the past decade. Now there is a capitalist cliché about "making your money work for you" which is as misleading as statements about the famous billionaire tinfoil-magnate, Lord Skiver, having "built" a palatial residence in the South of France. What it really means is using your money in order to make others work for you. And if I had invested a million pounds in a share portfolio covering those hundred companies ten years ago, I would now have over six million, without even having heard of the companies, let alone worked for them.

This leads us to the key question. Where would my extra five million pounds' worth of wealth have come from? The honest answer is so simple and obvious that it will give the average economist (who works for money by dealing with such “complex” matters) a bout of apoplexy. This surplus is created simply because the wages and salaries paid to workers by our employers amount to far less than the value of the wealth we are creating. And that surplus value goes directly into the hands of those who own the productive resources in the first place, allowing them to build up their monopoly of the means of survival still further.

The prices of goods and services reflect the "value" label which is pinned on them by the capitalist economic system. These relative "values", or ratios in which goods and services are exchanged, are determined ultimately by the amount of socially-necessary labour-time required to produce them. In other words, the quantity and quality of human effort involved in producing some finished item (and delivering it to its point of consumption) is what guides capitalism towards determining its price on the market. Within the wages system, however, the working abilities of human beings have themselves been turned into items of purchase. on the labour market. And the wage (or price) needed to buy your creative powers for a given period is determined in the end by the amounts of labour time or social resources required to "produce" you, as reasonably fit for productive work.

Under the influence of these economic laws, then, let us assume you have been employed for a week. The employer may pay £120, in real terms as the price commanded by your working abilities for that week. That may be the minimum amount necessary to supply the housing and sustenance needed to make sure that you are physically and mentally capable of being a productive and profitable investment for that employer. But unlike other items which are bought and sold in the world market, human working time has a special quality. It is the only item which, once bought, will then proceed to create new values, new wealth. Other investments may seem "productive", but in all cases it is human labour alone which is responsible for generating socially recognised wealth or value.

Having hired you for the week for £120, the boss can rely on you to produce new value substantially in excess of this, even allowing for "overheads” such as paying for fuel and other services, raw materials and the depreciation of machinery. The simple fact is that given access to natural resources and twentieth century technology, one worker can produce the basic material necessities for one person in a fraction of each day, or week, or year. In a sane system of society this would happen, and the remaining time could be spent in constantly refining and improving life, in addition to safely and happily guaranteeing decent food and housing for every human being. In capitalist terms, however, those few hours taken by each worker each week helping to produce (directly or indirectly) the equivalent of their own bare means of survival, is seen merely as "the reproduction of the value of labour power", in other words the part of the week during which we create the equivalent of our wage. Any wealth you create in the remainder of the week goes to the owner of the enterprise (who may live a thousand miles away). The penalties for ignoring these present laws are severe in terms of material suffering, as any worker will find if you pack up and go home every Wednesday afternoon, informing your boss that you have finished for the week because you have created the "value" of your wage. This, then, is the legalised robbery which workers have too often been persuaded to vote for.

Clifford Slapper

Economics Exposed: Same old economic story (1987)

The Economics Exposed column from the August 1987 issue of the Socialist Standard

On 22 March of this year, the Sunday Telegraph openly mourned the passing of the Labour Party as a viable "opposition’' within British capitalism. In fact, leading politicians of both the Labour and the Conservative Party have long realised this common ground of taking it in turns to run the profit system, despite their public posturings and pantomimes. A glance at some of the economic policies with which the Labour Party tried in vain to woo the electorate in the recent general election will show just how similar these parties are in this area.

By the time of the campaign itself, the more daring claims of earlier years had been modified into the promise to reduce unemployment by at least 1,115,000 in two years at an annual cost of £5.9 billion, two thirds of which would be raised through taxation. Leaving aside for a moment the impracticality of the scheme, the brochure, New Jobs For Britain, is riddled with hypocrisy. Half of the jobs which would supposedly be created would be in the private sector. 160,000 of the suggested reduction in unemployment would, it turns out, have been by means of encouraging men over 60 to take early retirement. And despite all of the justified complaints, many from the Labour Party itself, about YTS and other present schemes not involving "real jobs", a further 360,000 of the claimed reduction would be through a "national training programme" creating “jobs and training places". Also, a further 30,000 16-year-olds would be persuaded to stay on at school, requiring a further 30,000 trainers in addition.

Quite apart from the hypocrisy involved here, though, and quite apart from the fact that all this would still leave over two million unemployed, these plans overlooked one key problem. Jobs exist within capitalism if and when capital is invested with a likely prospect of realising a profit. The financing of schemes through taxation involves reducing capital available for investment in the private sector (where Labour had hoped to "create" about half a million jobs), and transferring these resources into the hands of the bureaucracy which controls the state sector. The net total of capital available for investment would remain about the same, as would the prevailing market conditions which have been prohibiting investment in general. By taking some capital from private hands and "forcing” it into investment in this way, there may be a slight reduction in unemployment in the short term. But, as was seen in France a few years ago, this would very rapidly dissolve into continued mass unemployment, as the capitalist slump reasserts itself with renewed vigour.

During the election campaign, the Labour Party made some play of the claim that this latest blueprint did not depend on the more narrowly Keynesian concepts of trying to "create" credit or print money, as it had been widely recognised that this simply reduces the value of money rather than increasing the levels of wealth generated. But the alternative source of funding, that of taxation, again merely reallocates resources and is also powerless to control the inevitable capitalist trade cycle of slump and boom.

The real problem, of course, is that throughout the world market system production is geared to the profit-needs of a minority, as expressed through the fluctuations of the market. The socialist alternative, of meeting needs directly through a system of production for use, is scoffed at as loudly by Labour as by the Tories (the only difference being that the Tories" arrogance has again been allowed to wallow in power for the time being, whilst the Labour Party's dismissal of socialism has not even won them that dubious reward). In The Alternative Economic Strategy it is stated that: “Production only creates jobs if the products can be sold. Production for use is nothing more than a romantic fantasy unless there is some way of transforming social needs into effective demand". For "alternative”, then, read "same, old". It is Labour's obsession with sticking to the needs of the money system (which they cannot even get their eager hands on) which is the real romantic fantasy. Next month, we shall start to deal with outlining the ways in which socialism will be able to organise the production of wealth in the interests of humanity as a whole.

Clifford Slapper

Economics Exposed: Nation or class? (1987)

The Economics Exposed column from the May 1987 issue of the Socialist Standard

1. Nation or class?

If there is one thing British politicians love to talk about it is "the British economy". They all gleefully compete to outbid each other with the wonderful things they are going to do with it. They will control it, stimulate it, revitalise it and build it up for us. And yet the first thing we need to realise for a clear understanding of economics is that there is really no such thing as “the British economy" or, for that matter, any other national economic system. There are not any, and there cannot be any, truly independent or self-sufficient countries in the world today. The economic system we live under today is a global system.

The other main myth spread by politicians and economists is that within each nation there is some shared interest between all the people who live there, regardless of their role (or lack of one) in the "economy". This myth relates to the first, because their suggestion is that the key division in the world is that between various competing nations, with the entire population of each nation forming a "team" in competition with the entire populations of all other nations. The reality is very different from this. In real life, as opposed to the noisy but pointless speeches of politicians, the real division which counts is not that between nations. It is the division of class.

Consider for a moment the way in which you survive from day to day. Employers try to persuade us that the interests of the majority are best served by the growth of their enterprises, as this "provides jobs". But experience shows that whether we are in or out of work, the employing class will stop at virtually nothing in their efforts to increase their profits at the expense of the wage-earning class. Every strike, every demonstration, is a reminder of the constant and inevitable conflict going on between the two classes of present-day society. How can we sum up these classes?

The capitalist class consists of people who own or control substantial capital, or wealth used to generate more wealth. As individuals they are able to live comfortably and securely on unearned incomes. They do not need to seek employment. The great wealth of this minority — five to ten per cent of the population — is produced for them, from generation to generation, by those who do need to seek employment in order to survive. On the other hand, there is the working class. The great majority of people either work for a wage or salary, depend directly on the wage of a close relative, or rely on social security if they are unable to find a capitalist to invest in them.

In future months this column will explore in more detail the economics of capitalism, together with the alternative, socialist system of society which must replace it if the needs of the majority are to be met. To recap, however. on the points introduced this month: the present economic and social system, called capitalism, exists throughout the world. The key division is not between nations but between classes. Within each competing nation there are two classes. The minority class own, control and profit from the resources of each nation. We, the working class, do not possess "Britain": the British owning class "possess" us, as a vital part of their assets. And the competition between "nations" is a competition between national groupings of capitalist investors.

Clifford Slapper

Economics Exposed: Fair shares? (1987)

The Economics Exposed column from the December 1987 issue of the Socialist Standard

The plummeting of share values on October 19 of this year produced a lot of hot air, as pundits on all sides attempted to draw their political conclusions. Brian Walden, in a feature article defending the free market, warts and all, glibly referred to "capitalism's manifest superiority to socialism as a method of improving society" (Sunday Times, 1 November 1987). The Labour Party shadow cabinet produced a document stating that what was needed to avoid further trouble was "massive government intervention". And the CBI, at their Conference in Glasgow, made it a shocking crime to utter the dreaded word "crash", referring instead to a range of terms such as "adjustment". "nosedive", "the problem", "the events of the past few days" and "the latest squalls '.

There were two types of people who were immediately affected by the wiping of about 25 per cent off of the share prices at the London Stock Exchange in the course of a week. On the one hand, there were those for whom losing a quarter of the value of their shares meant losing millions, or very many thousands of pounds. Of course, they still had three quarters of the value of their shares, which would have been worth even more millions! Moreover, at the time of writing, share prices appear to be regaining a large part of their former value. For the people in this first category, socialists would not have shed any tears. They are a small minority who live comfortably on the backs of the rest of us. Most big capitalists would not have been affected by such a hiccup. Their privileged lifestyle smugly continued regardless of the panic by workers on their bosses" behalf.

We can sympathise rather more with the second group of people who were affected during that week. Many workers have been persuaded in recent years to buy shares in industries which had previously been nationalised. The government claimed it was taking these industries out of the hands of the state bureaucracy (which Labour had indeed falsely equated with "the people") and handing them over to ordinary people themselves. Of course, there was one snag. Most people are workers and therefore lack the cash to buy more than a handful of shares at the most. All the rhetoric about ordinary people becoming "capitalists" overlooks this simple fact.

To be a real capitalist you would require the cash to buy such shares in hundreds of thousands. Dividends paid on shares tend nowadays to be in the region of, say, 20p a share annually. While this provides the owner of a million shares with a nice unearned income of some £4,000 a week (making it a matter of choice whether to bother to go to work or not), the worker who has proudly bought 400 shares, for example, would receive £1.60 a week; hardly enough to retire on. It is an obvious but rarely stated fact that somebody can have a small "stake" in an enterprise, even with some minimal voting rights or control, but it is the size of the stake they can afford which dictates their position in society, their class and therefore their condition of life. And no reforms proposed by any of the political parties can even attempt to deal with this ultimate inequality at the roots of capitalism.

Beyond this aspect, several other problems have emerged from the great privatisation "sell-off" bonanza of recent years.

★ Largely as a result of these policies, the number of adults in Britain who own any shares has increased from 7 per cent in the late 1970s to 15-20 per cent today. But that still leaves four out of five adults with no shares whatsoever. There is every possibility that the number of shareowners will once again fall below 10 per cent, particularly after recent events.

★ Within the small minority who own shares, there is a much smaller minority who monopolise the bulk of all shares. About four fifths of all privately held shares are owned by less than one per cent of the population.

★ Of all the shares bought in recent "privatisation" issues such as the Trustee Savings Bank. British Gas and even British Telecom, a substantial proportion have already been cashed in again, with more shares gradually falling, predictably, into fewer hands. In many cases workers had saved a few hundred pounds and found that they needed that money back again after a year or two to help with household expenses, for which they had no other resources to fall back on. In other cases the intention was to make a quick (and very small) profit, then withdraw. The proceeds will hardly finance a life of leisure. Real capitalists do not have to sell their entire investment portfolio some months after acquiring it.

It is the people in this second category whose recent position was tragic. In some cases, workers had put their life savings into projects promoted by the government's smooth-talking advertisers only to watch their modest nest-egg eaten into during one week by the fluctuations of the business casino known as the Stock Exchange. During the television coverage of the October "crash", some investment analysts actually came on (rather too late) and said that it really was "not right" for the "very small investor" (the worker) to get too involved in the risks of share investment in the way that the big investors are able to and that the dramatic fall in share prices might serve as a warning and lesson to such people.

The real lesson, however, is that such wild commercial fluctuations show us the true nature of the capitalist economic system. Based on competition for profits throughout the world market, capitalism is unpredictable, uncontrollable and unable to meet human needs securely. The mass media had a field day, getting excited about their tedious obsession with share price indexes minutely fluctuating in a way that was of little immediate interest to most viewers. It was nearly as bad as the boring hysteria of the election coverage during the summer. What they failed to point out, though, was that such "strange" developments have happened before and will happen again, because of the very nature of world capitalism itself. They will happen under Brian Walden’s "free market" and under the "massive government intervention" which the shadow cabinet waffled on about. Nobody can predict when such problems might happen again, or find any way to avoid them.

The price of shares in a company can respond to subtle changes in business "confidence”. In a sane, socialist society the only pointers will be human needs on the one hand, and the real resources available for meeting those needs, on the other. The only “confidence" to be concerned about would be our vital confidence in our own ability to work together co-operatively to meet our needs. That ability certainly exists.

The temporary failure of "confidence" which found expression on October 19, on the other hand, was a failure of confidence in the secure, continued flow of profit into the bank accounts of the parasite class in society. They seem to have picked up since then, and persuaded themselves that there is nothing to worry about. Shall we prove them wrong?

Clifford Slapper

Economics Exposed: The causes of mass unemployment (1987)

The Economics Exposed column from the November 1987 issue of the Socialist Standard

Millions of people in Britain and throughout the world are suffering the poverty and indignity of unemployment. It has become a cliche in the 1980s to say that we are in the depths of a recession. That is a simple phrase which contains a massive range of suffering, bringing with it increases in racist violence, alcoholism, illness and even suicide.

There are many myths and false theories about the cause of this mass unemployment. Perhaps one of the most popular is that with the least academic pretensions. It is widely stated that this vast waste of productive resources, the large-scale redundancies and resulting downward pressure on the wages of those still in work has all arisen because "British industry" has become less competitive. Workers, it is claimed, have been both lazy and greedy, with high wage demands and low productivity, and that therefore sales have fallen.

First, let it be said that the politicians and press millionaires who are particularly fond of promoting this myth are not to be seen for dust when any really useful productive work might be going on. However, there are several other reasons why this claim should be rejected.

In almost all of the most industrially advanced nations of the world, unemployment has gone up significantly in the last 10 to 20 years. It is true that the increase in Britain has been particularly rapid, but the problem is quite obviously world-wide and cannot therefore sensibly be seen as a "British" problem.

Second, is it the case that during the 1970s. for no reason, workers in their millions suddenly became more "greedy" and “lazy" than they had been in the 1960s? Such explanations for crisis are clearly fantastical. Moreover, it is a gross insult and distortion to refer to the productive majority in society in this way. Some of the most tragic victims of the recession are people who have worked themselves towards an early grave, building up their employers' fortunes, only to be told in middle age that they are "redundant" to their company's future plans for profit-making.

Thirdly, let us take this popular myth about the cause of recession to its logical conclusion. If it is our high consumption relative to productivity which is the cause of our problems, then the answer would be to work even harder, produce even more, and consume even less. Well, if that formula is the "answer", you might wish you had never asked the question! The fact is, with a full use of modern technology and all of the resources available to us, it would be possible to meet needs far more adequately than at present.

The real problem is that within the present world-wide economic system, production takes place only if it will financially benefit the minority who own and control capital. You could work twice as hard for half as much, and yet still if the market system is passing through one of its periods of recession, your job will be at risk.

The market system which exists throughout the world today is rooted in competition rather than co-operation. Production levels are decided on the basis of guesswork, as companies estimate the activities of their rivals and the level of profitable sales they might expect. The vast network of production is balanced on this fragile foundation.

As the level of investment and production builds up by fits and starts, it is only a matter of time before one industrial sector or other overestimates sales potential and then has to make dramatic reductions in its level of investment. The market becomes "glutted", profits start to decline and redundancies follow, leading to recession in other markets. This happened, for example, in the British steel industry in 1973-4, with 70,000 resulting job losses.

This then produces a knock-on effect on other industries (in the case of steel, these included shipbuilding, car production, metals and heavy engineering). With an imbalance or dislocation between these different industrial sectors, and the spreading problem of overproduction relative to the market, the recession becomes general.

This is part of the trade cycle of capitalism, which has passed inevitably through periods of boom and slump since it began. The recessions of the 1890s and 1930s, like the present recession, were part of this cycle. In future months we will be looking at how recession is caused in more detail. But our starting point, in dealing with the popular myths of the gutter press, is that British workers. like other workers across the world, are the victims of this process, not its cause.

Clifford Slapper