Notes By The Way: The Depression not Due to Gold Shortage (1933)

The Notes By The Way column from the January 1933 issue of the Socialist Standard

The Depression not Due to Gold Shortage

It did not take long for the facts to disprove the argument that gold shortage was the cause of the depression, and each month the mounting figures of gold production confound the forecasts of a progressive decline. According to the latest figures (Evening Standard, October 21st, 1932) it is estimated that the mining output this year will exceed that of 1931 and all recent years, and will be nearly equal to the record output of 1915. In addition to the increasing output of the mines, hoards of gold are being released from India, China, Russia and Australia.

The gold stocks of 48 central banks and governments are now about £2,500,000,000, which represents an increase of 16 per cent. since August, 1928. It is obvious that if a smaller quantity of gold was sufficient to carry the vastly greater volume of trade in 1928, the present depression, which coincides with a larger quantity of gold, cannot be due to gold shortage.

On the day following the above report about gold reserves, it was announced that a new 40-mile extension of gold-bearing ground on the Witwaterrand had been discovered (Evening Standard, October 22nd), promising a further increase in gold production.

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A Useless Sacrifice

The official policy of the Communist Parties, many times re-affirmed, is that the only road to the conquest of political power is by street-fighting, leading on to civil war. The S.P.G.B. rejects that view on many grounds. One of them is the useless sacrifice it involves for those who actively adhere to it, useless to the Communist Parties and to the working class. A recent Court case is worth notice. Mr. Sidney Elias, a Communist paid official, was charged with inciting other Communists to stir up “hunger marchers” to commit acts of disorder. The jury found him guilty and he was sent to prison for two years, which means that he will be prevented for that period from assisting his party to propagate its views, and when he is released he will be physically and mentally less fit to carry on that work than he is now.

Against this the Communists will argue that the case has a propaganda value in that it enabled Elias to gain publicity for his party's principles. In fact—as usually happens in trials of Communists —instead of boldly declaring his principles he allowed his counsel to repudiate them on his behalf. He said that there was no evidence that the letters written by him actually reached the Communists who were alleged to have been incited to disorder. He denied that they were incited. He said that when he used the words "fight" and “struggle" he meant them “merely in the political sense”; and that the letters only urged demonstrations, and “demonstrating was a perfectly legitimate way of manifesting one's sense of grievance." (Report in Manchester Guardian, December 13th). In short, the propaganda effect of the trial is merely to broadcast the impression that the Communists are misrepresented people who really stand by constitutional methods. In other words, the defence put up at the trial was a repudiation of the Communist policy of street-fighting and civil war.

The whole thing is futile and regrettable, both from the point of view of Sidney Elias and from the point of view of any unfortunate workers who may have been influenced by the stupid Communist propaganda.

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A Curious Sidelight on Empire

The conflict between China and Japan produced a strange incident, which is recorded in the New Statesman (October 8th). On March 11th, the League of Nations Assembly decided to set up a negotiating committee. The British Government, whose actions had shown distinct leanings towards Japan drew up a list of governments to be members of the Committee. The smaller powers, whose sympathies are with China, drew up an alternative list, including South Africa. The two lists were voted on, and although South Africa is in the Empire and Portugal is outside, Portugal was appointed and South Africa defeated by one vote, the vote of Sir John Simon representing the British Government. The “ties of Empire" are not allowed to interfere with the economic interests of the British capitalists.

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The I.L.P. and Electoral Reform

Mr. Tom Kirk, who a year or two ago confessed that his party—the Labour Party—had never preached Socialism, and that only the S.P.G.B. had stood by Socialist principles, is now in the I.L.P. (Maxtonite). He states in the Railway Review (November 18th, 1932) that the Labour Party agreed with the Liberals and Tories to the clause in the Representation of the People Act which compels Parliamentary candidates to deposit £150, because they saw that it would hamper 'the small and poor organisations (the S.P.G.B. for example). Mr. Kirk calls this a “dirty agreement," presumably because the I.L.P. (which has now lost those of its supporters who used to donate money by the £100 and £1,000) will itself be hampered by the clause in future.

It would, however, be interesting to . know whether the I.L.P., when it had plenty of money, ever protested against the dirty agreement.

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Is the Russian State “Withering Away"?

The Marxian view of the State has caused a good deal of embarrassment to the Bolsheviks in their efforts to square the actual situation in Russia with the idealisation of it which they offer in their propaganda. Engels’ words about the State “withering away" have compelled them to indulge in all sorts of contortions. Engels wrote:

  The first act by virtue of which the State really constitutes itself the representative of the whole of society—the taking possession of the means of production in the name of society—this is, at the same time, its last independent act as a State. State interference in social relations becomes, in one domain after another, superfluous, and then dies out of itself; the government of persons is replaced by the administration of things, and by the conduct of processes of production. The State is not “ abolished.” It dies out.

(“Socialism, Utopian and Scientific,” by F. Engels. Swan Sonnenschein Edition, 1802. P. 76.)

The Communists claim that they are building Socialism in Russia and that they have performed the act which—in Engels' words—should prelude the withering away of the State. Some of them therefore take the logical course of claiming that the State in Russia is indeed withering away. Thus the Labour Monthly (a Communist journal) claims in its September, 1931, issue, that

   There are, in fact, in the Soviet Union to-day, with the enormous development of the initiative of the masses, of their participation in the ordering of social life, and with the advance towards abolishing the distinction between town and country, elements of this "withering away" already perceptible. (p. 588)

Unfortunately for the Labour Monthly Molotov, Chairman of the Council of People's Commissars, admits that this is not the case. In a thesis presented to the 17th Conference of the Russian Communist Party early in 1932, he said, concerning Russia: —

  Not only does the class struggle not end, but in some sections and at some periods it may and will become considerably sharpened

(Labour Monthly, April 1932. P. 246)

Naturally, where there is a class struggle there is no possibility of a withering away of the State, and the Labour Monthly, summarising Molotov's discussion of this further point, says: —

  The Thesis also considers the question of the “withering away” of the State, but points out that while the establishment of the Proletariat Dictatorship has already transformed the State into a semi- State, the conditions of internal and external class-struggle demand a strengthening of the State in the immediate future. . . . (P. 246.)

It is amusing to be told that the Russian State—which is a fairly faithful copy of the Czarist Government in respect of its bureaucracy, its political police, and its arbitrary use of its repressive powers—is a “semi-State," whatever that is supposed to mean. But the cream of the jest is Molotov’s further remark that the Russian State is to be strengthened in the immediate future "as a condition for its eventual ‘withering away.' " Lloyd’s George’s “war to end war" has nothing on this.

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Can the Capitalists Afford Reforms?

Mr. George Hicks, in a pamphlet, “The Struggle for Socialism,” puts forward the incorrect notion so much favoured now by the Communists and the I.L.P. that the capitalists are so poor that they cannot afford to buy off working class discontent with any more reforms. Mr. Hicks says: —

  British Capitalism, in relation to World Capitalism, is in such a fix that it is sheerly impossible for it to grant ameliorative measures to the workers. It is in a condition of stagnation and decline. It can give no reforms, make no concessions. Gradualism, Reformism, Fabianism, Lib-Labourism—all those “isms” which enabled the Labour Party hitherto to make its broad appeals—have experienced a withering at the roots.”

In spite of being widely held among the reformists, this doctrine is utterly untrue. In spite of the impressive-looking figures which represent the cost of the so-called social services—education, old age pensions, unemployment pay, etc.—the capitalists spend only a very small part of their wealth on them. The absurdity of the argument can be illustrated in another way. Since 1921 wage reductions recorded by the Ministry of Labour total something like £600 millions a year, which far exceeds the whole cost of the social services. That is to say, the amount saved to the capitalists by cutting their labour costs far exceeds their total expenditure through taxation on protecting the workers against the worst effects of exploitation.

Prophecy is dangerous, but it is safe to say that as soon as the capitalist parties find that the only way to win elections is to promise more “reforms,” they will vie with one another at it just as they have done in the years 1918 to 1929.

Already at a Midland town the Tory members of a Public Assistance Committee have found their activities so damaging to them in the local elections that they have refused to work it unless the Labour members of the local Council will sit on the P.A.C. with them.

Hardly was Mr. Hicks' pamphlet off the press when the Government announced its slight concessions over the means test.

Incidentally, if it were true, and the electors were aware, that capitalism could give no more reforms, Mr. Hicks—who got elected to Parliament by promising reforms—would stand very little chance of re-election on his reform programme.

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Lands Without Unemployment

Just at present, while the building of factories, railways and productive equipment of all kinds enables the Russians to claim that unemployment is at a minimum and that paying unemployment relief is unnecessary, the I.L.P. adds its voice to the chorus—of praise for the “land without unemployment.” Those who know the chequered history of the I.L.P. and its almost complete ignorance of the working of economic forces will be less impressed by what the I.L.P. says about Russia than by what it formerly said of America, France, Belgium, Australia, Italy and various other spots in which the I.L.P. has discovered capitalist “solutions” for the problem of unemployment.

“The Socialist Programme,” published by the I.L.P. in November, 1923, tells us that

  general unemployment has nothing to do with tariffs or free trade. It is determined by the monetary policy pursued by a country and not by its tariff-policy. (P. 26.)

So they looked round to see if they could find some countries pursuing an I.L.P. monetary policy; and sure enough they found several.

  That is shown by the facts of unemployment in the world to-day. There is none to speak of in France and Belgium, very little in Italy, nor has there been ever since the war. Why? Because the Governments and central banks of those countries have never restricted credit and thus destroyed the purchasing power of a large part of their populations. (P. 26.)

America, according to the I.L.P., was not merely perfect, it was better than perfect; not only no unemployment, but a shortage of labour—

  The banks have lent freely, and there is now an actual shortage of labour . . . There is no unemployment and no depression in the United States today. (P. 27.) (Italics ours.)

The I.L.P. was, of course, largely wrong about its facts and wholly wrong about the effects of applying its capitalist credit theories. In due course they had to admit this, and a writer in the New Leader said of the American banking system:

  I gather from some enquiries that we in England have gravely over-estimated the scientific work of this banking organisation.

(Brailsford, New Leader. Feb. 24th, 192ft.)

In the same way the I.L.P. will discover before long that they have “gravely over-estimated” the possibilities of planning Russian production and distribution in conditions which both at home and abroad are essentially capitalistic and which therefore preclude planning and preclude the solution of the unemployment problem.

In Russia some phases of the problem have been the enormous number of workers constantly in process of leaving one job and travelling elsewhere to look for a better one, and the over-population of the villages. Recently the Government has tried to check the former by imposing penalties on workers who leave their jobs, and has at the same time drastically cut down the staffs of State concerns in order to make them more profitable. In due course Russia will again have to recognise and deal with the normal capitalist problem of serious unemployment, and the I.L.P. will have to set sail for some new mythical paradise.

Edgar Hardcastle

How Not To Get Socialism. (1929)

From the July 1929 issue of the Socialist Standard

Alderman Tom Kirk writes in the “Railway Review” (May 31st, 1929) an article entitled “The Revival of Socialism.” The first paragraph is unimportant, but we reprint. here the remainder of Mr. Kirk’s article.

  But here is where we draw a distinction between Socialism and Labour politics. To the Socialist there is only one thing that matters, the growth of the Socialist outlook in the public mind. It is his sole reason for being in politics at all. He perceives that you cannot make Socialists by just preaching theory. That was the dream of the old Socialist League, just as it is the dream of the Socialist Party of Great Britain. But the mind of the average man can only be reached through the current politics of the moment. In order to be with you, he wants to know what you are “going to do." And you must provide him with a plan of action, even if the action is not likely to produce much more than a growth of his Socialist convictions. We can no more escape from the illusion of politics than the early Christians, by burying themselves in the deserts of Egypt, could escape from the contamination of the world, the flesh, and the devil.

   Consequently, however much the austere purists may declaim, we have got to get on with the job as we find it. Fortunately, the movement has now reached a point that we can definitely warn our supporters from expecting too much from this or that particular reform. It has been a matter of great satisfaction to note the almost complete absence of the type of speaker who promised a solution of unemployment if the workers would only “vote Labour.” And in his place a stressing of the point that unemployment would not be “solved” while the capitalist system remained. It could only be ameliorated, not “solved.” All this is to the good; and it is a healthy sign of the times that the boastful promises of the Liberals have been contemptuously disregarded by organised Labour, with the result that Mr. Lloyd George became exceedingly angry. On the whole, tosh and window-dressing have been at a discount at this election. 

   The task of making the great mass of Labour electors into Socialists still, however, remains. Nationalisation, municipalisation, and public ownership still appear too much in the mind’s eye of the average workman as methods whereby he will immediately advance his wages and working conditions. Ultimately they must lead to his uplifting and betterment, otherwise they would be purposeless.

    But as Hyndman used to say, “You cannot make oases of co-operation in the midst of a howling wilderness of competition. The Socialist perceives this; the mere Labour elector does not. While we do not expect a nationalised industry to “pay its way” in the capitalist sense, we cannot run it regardless of the balance sheet. That way trouble lies; and the ending of things as they have ended in Queensland. 

   Then, again, what is going to be done with regard to the vast sum of British capital which is invested in foreign undertakings? The annual interest on that is responsible for a quarter of our imports. It represents about £300,000,000 annually. It is gained by exploiting the foreigner. Do we propose to take over these investments? If so, the British Labour State would become an exploiter of foreign workmen. Do we propose to leave these foreign investors to enjoy their incomes undisturbed except of such taxation as we could impose upon them? But in any case, as the £300,000,000 principally arrives here in the shape of food and raw materials, which we require for industries, we should have to do “something,” All of which shows that when it comes to the real business of getting down to the establishment of Socialism we have hardly discussed the matter at all. It will be the work of Socialists in the immediate future to promote discussion on such subjects. We cannot live for ever on a mere nebulous labourism. We shall have to get back to the healthy old business of the I.L.P. and S.D.F. setting the pace. And now that Communism has become a spent squib, the possibility of such a development is apparent. The specific function of the new orientation will not be vote catching, but education of the public as to how Socialism is to be established.

THEORIES—THE TRUE AND THE FALSE.

Now to disentangle this network of Kirkian errors. Mr. Kirk professes to be a Socialist, and accuses the S.P.G.B. of being dreamers of theory. Nothing matters to Mr. Kirk but "the growth of the Socialist outlook in the public mind.” But what is the "Socialist outlook” but the knowledge of Socialist theories? Therefore, Mr. Kirk is another dreamer, if to hold a theory is to be a dreamer. But the S.P.G.B. repudiates that title. We are a political organisation, and are not devotees of the cult of Utopias. We do not pray for spiritual aid to attain our ends. Our declaration of principles distinctly says, "That the Working Class must organise consciously and politically for the conquest of the powers of government, national and local, etc.,” and at the elections we are prepared to put candidates for the polls. If the workers are not sufficiently class-conscious to support a Socialist candidate by supplying his deposit money, that is not our fault. Rather it is Mr. Kirk’s fault, and their misfortune.

After the high-minded attitude of "nothing mattering, etc.,” Mr. Kirk then says, “But the mind of the average man can only be reached through the current politics of the moment.” Here is the pose of the modern Jesus soiling his hands with Party politics. The next piece is rather funny. “He (the worker) wants to know what you are going to do.” So, Mr. Kirk thinks it best to present him with “a plan of action,” even if it will not bring forth much more than “a growth of the workers’ Socialist convictions.” But we thought Mr. Kirk was a Socialist. He should, then, be more than delighted if his “plan of action” only brought forth this "growth of Socialist convictions.” He, however, knows very well that it does no such thing, and only makes confusion worse confounded. The knowledge of what is meant by Socialism is essential to the making of Socialists. Mr. Kirk leaves us to infer that this "plan of action” is really only a blind to keep up "the illusion of politics.”

We cannot agree that politics are an illusion, but if Mr. Kirk thinks so, on what grounds can he justify his action of keeping up an illusion? I am afraid, after all, it is Mr. Kirk who has been dreaming. But to proceed. He says, “We (that is, the Labour Party) must get on with the job as we find it.” That, of course, means continuing to introduce reforms and patching up the capitalist system, but then he has the audacity to say that "at the same time they must warn their supporters that they must not expect too much from it.” He is pleased to notice that the Labour candidates stressed the point during the Election that while the Capitalist system remained they could only ameliorate unemployment, not solve it. Yes, but what happens after the ball? If they know this, why are they taking the reins of government into their hands again? And on what grounds can the Labour Party justify its existence, and Mr. Kirk his support thereof? Why does he not tell the workers that the advent of Socialism alone will solve their troubles?

Then we have Mr. Kirk bemoaning the fact that Nationalisation, etc., appears too much in the minds of the workers as a method by which they can improve their wages and working conditions. He quotes Hyndman as saying “ You cannot make oases of co-operation in a howling wilderness of competition,” and says that the Socialist perceives this; the mere Labour elector does not. But who is it that propagates the idea of Nationalisation? The Labour Party, not the S.P.G.B. Yet Mr. Kirk now finds it a stumbling block in the way of making Socialists. Oh, wonderful logic! The Socialists, to Mr. Kirk, means the I.L.P. and the Labourites. Therefore, they stand in the unenviable position of telling the workers to support a thing which they know to be unsound. Still speaking of Nationalisation, he says it must ultimately lead to the betterment of the worker, otherwise it would be “purposeless.” That is just the point; it does not lead to any betterment. By making industry more efficient less workers are required, unemployment increases, and these schemes, therefore, from the point of view of the workers are worse than purposeless, they are definitely harmful. He says, "while we do not expect a nationalised industry to pay its way in the capitalist sense, we cannot run it regardless of the balance sheet. That way trouble lies, and the ending of things, as they ended in Queensland.” In fact, of course, the I.L.P. advocates of Nationalisation vigorously affirm that in Queensland it did pay its way. The Queensland Labour Government failed because, as administrators of capitalism, they could not “deliver the goods” which they had promised to the workers. The workers were disillusioned, and having no knowledge of Socialism, voted once more for the capitalist class. Mr. Kirk would lead us to believe that the Queensland Government was being run by mere dreamers trying to run the. finances of the country without due regard to its balance sheet. But can he show us any important difference between the Labour programme in Queensland and in this country? He wants to support the Labour Party while disassociating himself from its policies.

Mr. Kirk could not have meant to have revealed such a lot when he started, but perhaps he was counting on the “Railway Review” not being read by “Austere Purists.” However, the cream of the thing is yet to come. We find poor Mr. Kirk getting concerned as to what the British Labour State (whoever that may be) would do with the interest coming from British invested capital abroad. I am afraid we cannot tell him. You see, we are only Socialists, and we only know what Socialists would do. We must leave the British Labour State’s problems for itself and Mr. Kirk to solve. "All of which shows that when it comes to the business of getting down to the establishment of Socialism we have hardly discussed the matter at all,” cries Mr. Kirk.

Presumably, then, settling the destination of interest from British invested capital abroad comes within Mr. Kirk’s theory of Socialism. Mr. Kirk’s theories make a Socialist feel sick. Interest and capital under Socialism! A little understanding of sound, instead of unsound, theory, would greatly benefit the illustrious Alderman. Interest and profit are essentially features of capitalism; likewise is the individual owner of property. Socialism means common ownership. There would be no persons here or abroad possessing capital. The question only arises in the dreams of Mr. Kirk. It certainly has nothing to do with establishing Socialism.

THE “HEALTHY OLD BUSINESS” OF MISREPRESENTING SOCIALISM.

The last few sentences are a fitting end to his article. I wonder he dares mention the S.D.F. or the I.L.P. in connection with "health.” Their part does not bear inspection. They have proved to be bad guides throughout to the working class. Their attitude on the War and their trickery at the elections of 1910 and 1906 respectively (see our Manifesto for facts) proves that the "healthy old business ” of the precious pair is not healthy but thoroughly diseased, in fact rotten to the core.

May Otway

Editorial: The Labour Government: Truth Will Out! (1929)

Editorial from the August 1929 issue of the Socialist Standard

The Socialist Party of Great Britain was formed 25 years ago to work for Socialism. We found ourselves then, as now, opposed by the I.L.P. and other bodies, whose members believed that it was useless to preach Socialism. Their method was to try to win working-class support by promising and agitating for Old Age Pensions, Health Insurance and other reforms. The workers, they said, want not Socialism, but “something now.” Let us promise them what they want and thus get a Labour Government. The numerous benefits it will bestow on the workers will then win their support for the introduction of Socialism.

This theory, as we pointed out, was based on a series of misconceptions. It assumed that a Labour Government could so run Capitalism as to remove the great problems which have been, and are being, produced by Capitalism. It assumed, in other words, that unemployment, poverty and the like, are the outcome, not of the system, but of the stupidity, malevolence or incompetence, of Liberal and Tory statesmen. It overlooked the very important lesson of modern representative Government that the party which happens to be in power gets blamed by working-class electors for the evil effects of the Capitalist system on themselves.

All these years we have carried on the hard struggle to build up a party of Socialists, understanding and ready to work for Socialism. Our critics, in the meantime, have carried on their work of building up the non-Socialist Labour Party, incidentally making our work tenfold more difficult. They have succeeded to the point of being in power, the largest party in the House. But no sooner do they get to work than they discover the truth of some of the counts in our argument.

Mr. J. H. Thomas, Lord Privy Seal, is commander-in-chief of the special section devoting its energies to the problem of unemployment. On Friday, July 5th, he addressed at Southampton the Annual General Meeting of the National Union of Railwaymen. He first admitted that the Labour Government is in office to administer the Capitalist system. He said :—

  I have been entrusted with the responsibility of seeing how far within the limits of our Parliamentary traditions and our resources of the State—and accepting the present order of society —how far it is possible to mobilise, organise, institute, and get going useful works for those now unemployed. (See “ Daily Herald ” Report, 6 July.—Italics ours.)

His subsequent remarks indicated that even a few weeks of office have taught him how little difference a change of persons makes to the administration of Capitalism. He said :—

   We ask you not to expect too much, nor attempt to force from us, because we are a Labour Government, what you would not force from a Capitalist Government.

Thus we have the delightful spectacle of the workers being asked not to demand their instalment of “something now” (which they have already waited a generation to get) by the very people who have preached the doctrine of “something now" in opposition to Socialism.

The moral of this has been seen by at least one Labour opponent of the Socialist Party, Mr. Tom Kirk, alderman at West Ham. In a letter to the “New Statesman" (July 13th) he states that the Labour Government’s declarations on unemployment caused dismay among their supporters in the House. But what is most significant is Mr. Kirk’s admission that the building up of the Labour Party has been at the expense of Socialist propaganda. He writes :—

  The work, however, of building a Labour Party thrust “critical revolutionary” Socialism into the background, where it stubbornly maintained itself in the Socialist Party of Great Britain.

Mr. Kirk, one of those who helped to thrust Socialism “into the background” is now convinced that the Labour Government will prove a broken reed. "Indeed,” he writes, "unless I read things wrongly, we shall soon witness a reversion to the earlier standpoints of the old S.D.F.”

To this we need only add that the earlier standpoints of the S.D.F. are embodied in the Socialist Party of Great Britain, the only organisation which declined to abandon Socialism in order to build up the Labour Party, and the only organisation which will not be implicated in the disgust and disillusion which will follow the inevitable failure of Labour Government.