Planlessness (2026)

Book Review from the January 2026 issue of the Socialist Standard

The Economic Consequences of Mr Trump: What the Trade War Means for the World. By Philip Coggan. Profile £7.99.

A first reaction to this book is that it was likely to be out of date by the time it was published. Given Trump’s tendency to change his mind, anything said would probably no longer apply after a month or two. The author does indeed record Trump’s decisions about tariffs and his repeated revisions of them, describing him as ‘a man without a plan’ who based the calculation of tariff rates on an absurd formula. But he also notes some ideas that underlie Trump’s policies.

The main reason seems to be the intention to return manufacturing industries (and jobs) to the US, but this is unlikely to be successful. In 2013, as an illustration, Motorola opened a smartphone factory in Texas, but it closed after a year because of high costs. Even when it does pay off, building new factories takes time and the US has a shortage of factory workers; they might come from abroad, but of course Trump is clamping down on immigration. The US will simply not re-enter ‘a golden age of manufacturing employment’.

On the whole Coggan adopts an orthodox economic perspective, arguing, for example, that tariffs interfere with market signals about the causes of rising and falling prices. Tariffs have varied over the centuries and protectionism was more widespread between the two world wars. But since the 1960s tariffs have generally been falling, from a global average of 14 percent then to 10.9 per cent in 2000 and 2.5 per cent in 2021. Free trade, he says, is good for an economy, though there has rarely been completely free trade.

One good point he makes is about the interconnectedness of global production, with long and complex supply chains. An iPhone is based on 187 suppliers across twenty-eight countries, while cars imported to the US from Mexico consist largely of components made in the US. Around eighty per cent of the toys sold in US shops are made in China, so the massive tariffs Trump wanted to impose on imports from China were a non-starter, and they have now been scaled back in a major way. American workers are already complaining about higher food prices as a result of the various tariffs, such as bread doubling in price (Guardian 19 October).

The whole world, Coggan suggests at the end of this short volume, ‘will suffer the adverse economic consequences of Mr Trump’. But really these are the consequences of the capitalist system, not the result of the idiosyncrasies of one man.

Paul Bennett

Into Battle! The War over Soap Substitutes (1950)

From the July 1950 issue of the Socialist Standard

According to all reports, the first salvoes are now being fired in what promises to be one of the biggest trade-wars we have seen in this country for many a long year. The contestants in the struggle are the manufacturers of detergents, or soap-substitutes.

The set-to in Britain is actually the second round of a contest which has only just come to an uneasy (and probably temporary) end in the United States. Here, Proctor and Gamble an American firm, and Lever Bros., the Anglo-Dutch combine, fought out a bitter struggle for many months before Lever Bros, were defeated and forced to content themselves, for the time being at any rate, with only a minor share of the American soap-substitute market.

Now the scene has changed to this country, though the chief contenders are the same. On the one hand is Thomas Hedley & Co., the British subsidiary of Proctor and Gamble; on the other. Lever Bros, once more, fighting this time on their own ground. In addition there are a host of smaller fry, all trying hard to keep a foothold in a very precarious and uncertain market.

All of them, big and small, are spending large sums on advertising (Hedley’s and Lever Bros, are employing two of the biggest firms in the business). Hedley’s are reported to have already spent £72,000 on Press advertising for “Dreft,” besides about £100,000 on film publicity. Now they are busy launching “Tide” on the public, with what seems like lavishness of advertising even greater than that devoted to “Dreft.” Lever Bros, in their turn have already spent £73,000 on “Wisk,” and £22,000 on their liquid product “Quix.” Both seem ready to spend a lot more besides. These two big firms, it will be noticed, are playing the game of running two products, so giving themselves an opportunity of pitting one against the other, as well as against the products of their rivals. When one product really begins to outstrip the other, then they will probably drop the poorly-selling one and concentrate on the one that is selling well. One of them, perhaps both, may even now be working out plans to launch a third, so getting the additional advantage of newness—an important factor when each new product is launched with lavish publicity.

Just recently, the situation has been further complicated by a new big rival, the American Colgate-Palmolive-Peet combine, which plans to put its own product “Fab” on the market in a big way. The smaller fry are, of course, now some way behind, but they are all struggling hard for their own little place in the trade. Domestos Ltd., for example, have already spent £39,000 on advertising “ Stergene,” and the Brobat Mfg. Co. £33,000 on “Brobat.” Boots with “D.10,” and the Co-op with “Cascade,” are of course at some advantage in that they can distribute their products in their own shops, but their trade will in effect be confined to their own distribution system. They will not stand a chance on the open market unless they are prepared to risk a great deal of money in pushing their products. Having taken a look at the jungle outside, they have no doubt already decided to stay at home!

This high-pressure advertising is, of course, only the prelude to the fight. The first real blow was struck by Lever Bros, when they offered, temporarily, to let housewives have two packets of “Wisk” for the price of one. Hedley’s replied by covering large areas of London with vouchers offering a 1s. 7d. packet of “Tide” for 6d. Apart from stunts, prices generally are already on the way down. “Fab” recently dropped from 1s. 9d. to 1s. 7d.; “Dreft ” from 1s. 7d. to 1s. 4d.; and “Cascade ” from 8d. to 6d. (Price differences are largely accounted for by differences in the sizes of the packets). All of them are probably working frantically to think of other bright ideas which will enable them to gain an advantage.

Even when soap-rationing is abolished, all the manufacturers seem convinced that there is a future for detergents. If they did not think so, they obviously would not be doing what they are doing. Reinforcing them in their belief is their determination to bring down the price of detergents below the price of soap. One of the main ways in which this can be done is by reducing the price of the raw materials from which detergents are made.

Detergents, as is well known, are derived from petrol, and just as competition is now rife among the detergent manufacturers so is competition among the oil-producers. At least four companies are already producing raw materials for soap-substitutes, and others are thinking of doing so. Shell are the biggest producers at present with “Teepol.” After them come I.C.I. with “Lissapol,” Anglo-Iranian with “Comprox,” and Monsanto Chemicals with “ Santomerse ”— all struggling hard to get hold of as much of the rapidly growing market as they can. For detergents to really compete with soap, the oil-producers will have to cut their prices. That they can do so was shown when the soap ration was last increased—prices immediately dropped. They will probably find means of doing so again when rationing is fully lifted and their products have to compete on equal terms with soap.

Whatever form the struggle takes, it should be interesting to watch. The contestants may fight to the limit, as they did in the United States. They may try to reach a compromise, which will certainly be an uneasy and temporary one. Perhaps the abolition of soap-rationing will prick the whole bubble. We do not know, nor do we wish to speculate.

What is worthy of comment is the stupidity of a system in which huge sums of money are being spent in selling, one against the other, products between which there is probably not a scrap of difference worth troubling about; the stupidity of a system in which adults in complete possession of their senses spend their working hours thinking up new and better stunts to help sell these products; the stupidity of a system where other fully mature men and women worry themselves sick wondering whether “this” is a better name than “ that,” or “that” is a better name than “this” (we have it on no less an authority than the Financial Times that enormous care and market research is expended on choosing just the right brand name). The example of soap-substitutes can be multiplied a thousandfold, and the wastefulness in terms of wealth and human effort is correspondingly greater.

Capitalism has introduced a substitute for soap. When are you workers going to introduce the substitute for capitalism—socialism?

Stan Hampson

Trade abroad (1974)

From the June 1974 issue of the Socialist Standard

The 70th anniversary issue of the Socialist Standard carried throughout its pages a series of snippets from old Socialist Standard articles highlighting the SPGB's unique position on issues of the day. Where possible, I've provided a link to the full article.

Sir Walter Runciman writes :

“Now that peace is signed, the first necessity for the British Empire and for the whole world is to get trade going everywhere. . . . Only by a full stream of trade can the flow of food and goods between all peoples wipe out hunger, misery, and unemployment, and possibly anarchy.”

Capital lying idle is unfruitful, but capital employed in trade brings in rich returns, hence the anxiety of the profit seekers to get on with the business. That a full stream of trade will will wipe out hunger, etc., is the usual delusive humbug of the employing class.

[From “Peace—Competition—War”, Socialist Standard, August 1919]

Canada versus Trump (2025)

From the June 2025 issue of the Socialist Standard

From the Socialist Party of Canada’s monthly newsletter.

Canada versus Trump

You are all aware of the declaration of trade war Trump imposed on the rest of the world on April 2. In Canada there was a sigh of relief that it wasn’t as bad as many feared. Nevertheless, he kept the existing 25 percent tariffs on Canadian steel and aluminium and will maintain tariffs on Canadian goods that don’t comply with the North American trade deal that sets rules about limiting foreign content.

Though Canada hasn’t been hit with tariffs as hard as some countries, nevertheless its effects are still felt. A survey conducted by the city of Toronto showed that Toronto businesses are bracing for job cuts and cost increases. Of the 513 businesses that responded, one third said they were implementing hiring freezes, while another third were expecting job cuts. Three quarters were anticipating rising costs, which was the most common concern, while about half are expecting major disruptions to their operations. The city promised to allow companies who can show they’ve suffered because of tariffs, a six-month property tax reprieve.

American companies will not get contracts from the city. Other cities across Ontario are also bracing for the impact; at a conference of city mayors on April 3, they asked the provincial and federal governments for a portion of ‘any stimulus package’, especially for infrastructure funding. Most Canadians are hoping for the federal government, elected on April 28, to be able to deal with the worst aspects of tariffs.

Canada is hitting back at Trump’s tariffs with import taxes as much as 25 percent on vehicles assembled in the U.S. Ford, GM and Stellantis are the automakers with the biggest share of Canadian sales that rely on imports from the U.S. For all three companies a majority of the products they sell in Canada are made in the U.S. Under Canada’s new rules, the amount of tariffs on a vehicle will depend on its components, though Mexican parts are exempt. If a car is assembled in the U.S. with 80 percent U.S. parts and 20 percent Mexican or Canadian components, the 25 percent levy will apply to the U.S. content, resulting in a total tariff rate of 20 percent. One thing about capitalism, life under it gets more complicated every day.

One positive thing about the stupid trade war is the fact that thousands of American physicians want to come to Canada. John Philpott, CEO of CanAm Physician Recruiting Inc., a Canadian company which specializes in bringing international medical personnel to Canada, said since Trump took office there has been a 63 percent increase in registrations from American doctors wanting to work in Canada. Philpott said, ‘My phone’s been ringing off the hook.’ The surge in interest comes as the U.S. faces health care funding cuts, mass layoffs and hiring freezes, including at the Center for Disease Control and Prevention, which has lost 2,400 jobs. Before Trump was elected many Canadian doctors went to the U.S. for more money; Trump quickly and surely changed that. Of course this can only be beneficial to Canada’s shaky health system, but it’s just an improvement within capitalism which we as socialists work to abolish.

We of the SPC as individuals are against Canada becoming the 51st. state, but politically we will not work against Trump’s mad intention. Whether Canada remains Canada or becomes part of the U.S. it still means exploitation of the working class.

Federal election

The Liberals under Mark Carney won 169 seats at the federal election on April 28. This was 3 seats short of the majority they needed; the Progressive Conservatives (PC) winning 144. The leftist New Democratic Party (NDP) won 7, the Bloc Quebecois 22 and the Greens won one. Most people thought it would be a tight race which it was. Both Pierre Poilievre and Jagmeet Singh lost their seats, which must’ve been humiliating. In Poilievre’s case it may well have been his smart-ass personality and his constant personal attacks on his opponents which done-him-in. With Singh, whose party lost 7 seats, it was probably because so many would-be N.D.P. voters voted Liberal, not wanting to split its vote, thinking Carney would do a better job of standing up to Trump than Poilievre, which was the main election issue.

The Toronto Star endorsed the PCs in the election on April 28. Its main points were that Canadians should support a government that is for free enterprise, eliminates barriers such as cutting red tape, restores fiscal discipline, reforms the tax system and develops ‘our’ natural resources and ‘That is why we are supporting Pierre Poilivere and the Conservative Party of Canada’. Since its founding in 1892, the Star’s main mantra has been to this effect, ‘Hey listen up folks, capitalism isn’t the economic piece of junk Marxists would have you think it is. No Siree, it’ll work just fine if you smooth away its rough edges’. You might think that with their crusading and reforming zeal they would support an openly reformist party like the NDP or its predecessor the CCF, but no, they go for a blatantly ‘screw the working class party’.

Of all the provincial Premiers, Alberta’s Danielle Smith seems the likeliest to make a deal with Trump. This is probably because Alberta does a lot of business with the United States selling oil and energy. Recently Smith showed some of her conservative friends she had painted her toenails red to show her support for Canada which fooled few, if any. A Leger poll conducted in March showed that 15 percent of Albertans would like to be part of the 51st state, as 9 percent of the population as a whole. This amazed me as every Canadian I’ve spoken to and of those I’ve read in print are dead against it. Smith has given Carney a list of energy-related demands which includes scrapping a federal tax on oil and gas emissions, eliminating an electrical vehicle mandate and ending prohibitions on single-use plastics. That sounds tough, but some of those issues apply to other provinces.

Carney now has to form a coalition of sorts to get legislation through. Besides taking on Trump’s junk, Carney will have to deal with a possible postal strike, a health system in near chaos, crime which is out of control, housing problems galore including homelessness and a soaring cost-of-living, especially grocery prices; like, ‘Good Luck Mate’. For the working class in Canada, life would be slightly better if Canada did not become state 51, but nevertheless exploitation is exploitation and whether one is exploited as an American or a Canadian it sucks and not a one of the recently elected MPs will take a stand against it.

Cooking the Books: The King of Tariffs (2025)

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

‘Trump often cites the “gilded age” of William McKinley, the late 19th-century president, who imposed tariffs at an average rate of 50 percent to protect the domestic farming sector from foreign competition’ (Times, 4 April).

Actually, it was the manufacturing sector that McKinley wanted to protect. When he was a congressman for Ohio he drew up the Tariff Act of 1890 that came to be known as the McKinley Tariff. Trump calls him the ‘Tariff King’, a crown he himself clearly wants to wear.

In 1888, with the campaign for tariffs in America in full swing, Engels published an English translation, with his introduction, of a talk on free trade that Marx had given in French in Brussels in 1848. Engels quoted Marx as saying (in chapter 31 of Capital) that historically protectionism had been ‘an artificial means of manufacturing manufacturers’. In his talk Marx criticised free trade too but came out in favour of it because it would hasten the development of capitalism and so bring on the final confrontation between the working class and the capitalist class. As he put it:

‘The free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favour of free trade’.

Engels’s introduction provided a useful historical survey of protectionism — including which sections of the propertied classes in different countries had benefited from it and which had not at various times — and some background on what led to the McKinley Tariff, but also made some points about the effect of tariffs on different sectors of capitalist business which are still relevant today.

One difference he mentioned was between those sectors which relied on imported materials and those which didn’t. Manufacturers who obtained within the country the materials to transform into what they sold welcomed a tariff on imports of their product as protecting them from outside competition. On the other hand, those manufacturers who relied on imported materials did not want a tariff on them as this would increase the cost of producing their product. Nor did importers want tariffs generally.

This was seen today in the immediate reaction to Trump’s 2 April ‘Liberation Day’ on Wall Street, where share prices reflect traders’ views on the future profit prospects of the quoted firms. Shares in Apple whose smartphones are manufactured in Asia fell by 9 percent and ‘Big multinational consumer groups were heavily in the red, reeling from tariffs on Asian production hubs. Nike slumped 14 per cent’.

Exporters are not keen on tariffs either as their products are likely to be targets of any retaliatory action taken by other countries. America doesn’t export much manufactured stuff (except weapons of war and pharmaceuticals). Apart from oil and gas, its main exports are agricultural products. Sure enough, this is what China’s retaliatory tariffs, announced two days later, were aimed at. ‘The latest measures are likely to have the most impact on US agricultural exports, including soya beans, wheat and corn’ (Financial Times, 4 April).

In short, not all its business sectors benefit when a country imposes tariffs. America today is no exception. Some capitalist businesses are in favour of Trump’s policy but some will be lobbying for exemptions, even campaigning against him. Not that there is any guarantee that his protectionism will succeed in ‘manufacturing manufacturers’ in America, or, rather, in raising them from the dead.

In any event, as Engels noted:

‘The question of Free Trade or Protection moves entirely within the bounds of the present system of capitalist production, and has, therefore, no direct interest for us socialists who want to do away with that system.’

McKinley was elected president in 1896 but was assassinated by an anarchist in 1901.

Cooking the Books: Trumponomics (2024)

The Cooking the Books column from the September 2024 issue of the Socialist Standard

‘On the campaign trail, Trump has floated a ten-per-cent tariff on all imported goods, and a sixty-per-cent levy on those from China’ (New Yorker, 15 July). He also wants to devalue the dollar vis-à-vis other currencies. In an interview with Bloomberg Business he ‘called the strong dollar “a big currency problem” and “a tremendous burden on our companies”’ (Times, 29 July). Tariffs and dollar devaluation, that seems to be what his plan to Make American Capitalism Great Again amounts to.

The capitalist class in any country is not a monolithic bloc when it comes to commercial matters. There are differences between those whose business is exports, those who face competition from imports, those who import raw materials and parts, those who neither export nor require imported materials. What Trump has in mind would affect these groups differently.

A 10 percent tariff on all imports would benefit some US manufacturing companies by protecting them from outside competition. But this would mean an increase (not necessarily proportionate but what the market will bear) in the price of their products. Insofar as these are consumed by workers this would exert an upward pressure on wages, which would affect all capitalist employers even those involved in neither exports nor imports. It would also risk, in fact provoke, retaliation by the other country or trading bloc, which would affect exporters, who in the US mainly produce food for humans and animals.

When in 2018 his administration put a 25 percent tariff on imported steel and 10 percent on aluminium, the EU retaliated with tariffs amounting to nearly $3 billion on US imports. China reacted too. As the New Yorker noted, ‘when Trump imposed tariffs on some Chinese goods in 2018, Beijing retaliated with levies on American imports which hurt American farmers and manufacturers’, adding:

‘If a new Trump Administration introduced universal tariffs, many other countries would face enormous domestic pressure to respond with similar measures. In the worst-case scenario, Trump’s policies could lead to an all-out trade war’.

A world-wide trade war in fact, since Japan, India, Brazil and others would join in as well as China and the EU.

A fall in the value of the dollar compared to other currencies would make US exports cheaper and so be welcomed by exporters. But it would also make imports more expensive and so be unpopular with companies that rely on them, whether to sell or to use to produce something else. Because the dollar is the world’s reserve currency, held by states and companies to settle their international transactions not only with the US but also with each other, a fall in its value would have worldwide repercussions.

It would reduce the value of the reserves held by other states and companies. These are mainly held in the form of US Treasury bills and bonds; in other words, is money lent to the US government and which allows the US to run a trade deficit but also to finance its huge military budget. Making the dollar weaker might benefit US exporters but could make borrowing from abroad more difficult. Some US capitalists disagree with Trump’s approach and the matter (in which workers have no interest) will be settled at the ballot box in November.

Trump may act the boor (and be one) but he is essentially a businessman and wants to use the same sort of tactics — involving bluffs and deals — against US capitalism’s economic rivals that competing capitalist companies apply against each other. States do this anyway but generally more diplomatically. A Trump administration would make it clear for everyone to see that economic rivalry between states is about supporting their companies in the competitive struggle for profits.

Food as a weapon (1992)

From the August 1992 issue of the Socialist Standard

With the ending of the Cold War. American military power is no longer sufficient to hold its real economic rivals— Europe and Japan—in check, and the three power blocs are squaring up for the battle for world economic domination in the 21st century.

The current battlefield is a scries of talks on world trade, the General Agreement on Tariffs and Trade (GATT), which have now been stalled for nearly two years, with the European and US governments hurling abuse at each other over the emotive issue of farm subsidies.

So what is GATT, and why does an apparently minor dispute over handouts to farmers threaten to bring the world trading system to the point of all-out economic war?

The GATT process is aimed at promoting “free trade" amongst the competing states of the world, tearing down barriers to imports and allowing consumers to choose the most efficient supplier of anything from banking services to hairdryers.

In reality, of course, there is never any such thing as free trade among equal players— no ‘‘level playing field". US-based multinational corporations. with the economic battering ram of vast scales of production behind them, and the military and political power of the US state in the not too distant background, are clearly going to make easy meat of the struggling young industries throughout the “Third World”, currently protected by their own governments’ trade barriers.

Trade wars

Now all this is fine with European governments as well. They too have multinationals based on their soil, only too eager to participate in the turkey shoot. In the coming months you will doubtless hear ministers extolling the virtues of Free Trade for the health of the world economy.

But when we come to agriculture. there is a slight fly in the milk churn. European farms tend to be small and “inefficient" (unprofitable), whereas their US competitors tend to be large and “efficient"—fully industrialised and reaping the advantages of economics of scale.

This, of course, would give them a significant advantage in a genuinely free market, almost certainly devastating the European farm industry, and scoring round one of the battle for 21st century economic domination to America.

And American farmers have never been more desperate for markets for grain, which regularly gluts the American market. (Of course, this does not mean that there are no hungry people in America, simply that they can’t afford to buy what lies rotting in warehouses).

In fact this is another bizarre consequence of the ending of the Cold War. since in those good old days the Soviet empire bought all Americas surplus grain and paid on the nose with hard currency.

Europe’s governments, then, urged on by the powerful farming lobby, are determined not to give up their agricultural subsidies, while the US is desperate to prise the European market open.

A few months ago. a high- level EC delegation led by Portuguese Prime Minister Cavaco Silva and Commission head Jacques Delors, visited President Hush in Washington for crisis talks, with Cavaco Silva making it quite clear how deep the rift had become. “Sometimes there is a discrepancy between the apparent political goodwill and the technical proposals put on the table by the US”, he told the European (9 April).

And that’s just about as close as a diplomat comes to calling the other side a dirty cheating liar.

Both sides only entrenched their positions at the G7 economic summit in Munich last month, with John Major suffering a major rebuff to his attempts to break the deadlock, and vowing to continue to “bully, badger and cajole" fellow leaders into living up to the undertakings to conclude a deal by the end of the year.

In fact, although the European side has offered a 30 percent reduction in protection and support for agriculture, this would be on the basis of levels operating in 1986—a real cut of little more than 15 percent (The Grocer, 23 November 1991).

In the EC’s last review of support prices in June 1991. ministers cut a modest 1.5 percent from levels of support for oilseed, and at the EC Lisbon summit price support for cereals was cut 29 per cent. "Still not enough" said Hush.

Agri-business

The Daily Telegraph issued a dire warning following the failure of the Munich summit that the world is edging closer to a menacing era of protectionism. “There is a real danger that the Uruguay round of GATT could breakdown altogether, taking us back to the unstable trade bloc structures of the 1930s” (9 July).

The point is that food production is governed by the laws of competitive production for profit. Manufactures of food only survive by selling at a reduced price against their competitors, and with a glut of unsaleable food on the world market, pressure to subsidise unprofitable, mainly small-scale European producers against their industrialised US rivals is immense.

So the EC’s subsidies pile up yet more unsellable food, and US farming corporations are forced to watch their own surplus production rot in warehouses because it can’t be sold anywhere. The GATT negotiations are therefore a trial of political and economic strength between US and European agri-business, with their respective governments fighting their corners round the negotiating table.

What insanity! Capitalism— the competitive production of goods for sale at a profit—yet again proves itself to be completely unable to cope with a world in which we could provide an abundance of food for each citizen of this planet. It is the only system that actually manages to find adequate food production a major crisis. Surely its time to establish a system where this is an opportunity. through free access to all food production, to abolish hunger once and for all.

Andy Thomas

The trade war hots up (1971)

From the October 1971 issue of the Socialist Standard 

One of the myths in the economic textbooks is that the purpose of trade is to provide everyone amicably with the things he wants at the lowest possible prices, and that as restrictions on trade, whether in the form of protective tariffs and quotas on imports, or subsidies on exports, or of unstable currencies, prevent goods from being produced where and by whom they can be turned out most cheaply it is the duty of all ‘good governments’ to favour freedom of trade.

The myth was given official approval some thirty years ago with the establishment under United Nations auspices of the International Monetary Fund and the General Agreement on Tariffs and Trade (G.A.T.T.), through which the nations were to co-operate to their mutual advantage in securing currency stability, promoting trade and employment and working towards the removal of all trade barriers.

The reality is nothing like this. Trade is a war in which capitalists, alone or associated groups, try to turn their products into cash at maximum profit, and to this end seek to capture markets from rivals by any means that will serve, including government action to protect home markets, subsidised exports and putting pressure on rival governments.

Outside the Russian and Chinese blocs (which have their own systems of trade imperialism) nearly all governments pay lip-service to free trade, but it is a principle they support or reject in practice just as their changing needs require.

Marx was pointing out more than a century ago that the free-traders of one generation become the protectionists of the next. The classic example was the mid-nineteenth century English manufacturers to whom free trade was a religion. They had been protectionist in the eighteenth century, against the free-trade landed interests, but when developed British industry had the world at its feet their slogan was free-trade, with its accompaniment of cheap imported food which meant lower wages and higher profits. It was the landed interest which then became protectionist.

Later on, when British industry was successfully challenged by foreign rivals, the manufacturers reverted to protection.

After World War II it was American exports which were penetrating into world markets, and the dominant sections of American industry and food production wanted to impose free trade on the rest of the world. But, following the re-emergence of powerful industries in Europe and the spectacular expansion of Japan with its cheap ship building and steel production and the flooding of the American and other markets with cheap textiles, motor cycles, cars, cameras, TV sets etc., the protectionist interests in USA increased their influence on American trade and currency policy. Hence the Nixon move of imposing a ten per cent surcharge on imports, to be used as a means of putting pressure on other countries, particularly Japan, into up-valuing their currency in terms of dollars. This enabled America to get the results flowing from a dollar devaluation while technically avoiding direct devaluation (but also with suspension of the already much restricted convertibility of dollars into gold at $35 an ounce).

Simply as an arithmetic calculation, if the Japanese Yen is up-valued by say ten per cent, this would enable Japanese importers of American goods to get them nine per cent cheaper and would force American importers of Japanese goods to pay ten per cent more for them, thus stimulating American exports and discouraging imports. In practice the effect is likely to be modified by both buyers and sellers being willing to adjust their prices, even at the cost of lowered profit margins. The same applies to the ten per cent surcharge on American imports which in any event is likely to be a temporary measure.

The Nixon move was received with cries of rage from the affected capitalist groups, with charges and counter charges of ‘selfishness’, ‘bad faith’, ‘callous disregard of world interests’ and so on.

There are seventy seven countries which are members of G.A.T.T. but they found that when it came to vital question of American interests their numbers did not count for much. A typical bitter comment was published in the Evening Standard (20 August): -

Now G.A.T.T. finds who calls the tune. Today it is the turn of G.A.T.T. to find that when the pinching starts to hurt the boss, suddenly all the rules are changed. These last few days very eminent economic set-ups like the International Monetary Fund and the Common Market Commission have been waking up to the fact that it is the U.S. government and not they who call the tune when world monetary problems get too close to home.

Doubtless very true, but it is only a repetition of what every government has tried to do from time to time. A case in point was the sudden decision of the Wilson government in November 1964 to slam a fifteen per cent surcharge on all manufactured and semi-manufactured imports. (Later reduced to ten per cent and abolished in 1966). This was received with similar howls of rage. It was strongly denounced in G.A.T.T., in the European Free Trade Association, the Council of Europe, and the Common Market. The British government was condemned for lack of consultation, even with its E.F.T.A. partners, charged with breaking G.A.T.T. rules and with action contrary to the spirit of international co-operation. A Swiss spokesman at E.F.T.A. asked what was the use of making international agreements when the British government could so flagrantly violate them.

As usual the economic ‘experts’ are all at sixes and sevens in their efforts to assess the Nixon move and its consequences. At one extreme was Joe Rogaly in the Financial Times (1 September) and at the other Nigel Lawson in The Times of the same date. Rogaly sees hope that the road will be open ‘to a long term future’ in which there were no balance of payments crises and in which each nation produced the goods that it was best at producing, thus increasing the efficiency of the world as a whole and raising the general prosperity of us all’.

Nigel Lawson regards it as a disaster.

in the course of an essentially domestic economic initiative designed to secure his re-election next year . . . the President gratuitously, and almost as an aside, gave the world a bloody nose — and the commentators, nearly to a man, squealed with delight. At one blow Mr. Nixon has destroyed the international monetary order on which the post-war prosperity of the West has been based and created the biggest threat to world trade since the thirties and everyone marvels at his sagacity.

Lawson is wrong in thinking that if things get worse it will simply be the fault of the American government. Nixon was responding to a hotting up of the trade war which was already taking place and was affecting in greater or less degree all the capitalist world. While capitalism lasts there is no contracting out of its evil effects.

Edgar Hardcastle

Just a few more contradictions (1949)

From the July 1949 issue of the Socialist Standard

Socialists are always pointing to the stupidities and contradictions of capitalism, and capitalism certainly provides us with plenty to point to. Take, as a recent example, the agreement signed last month between Britain and Argentina, over which there has been so much fuss and bother. Under the terms of this agreement, which is scheduled to last for five years, both countries have undertaken to exchange goods to the value of £160 million. In line with her usual policy in these days of dollar shortage, Britain has stood out against using dollars for any part of her purchases and at the same time has insisted that the exchange shall be at parity, i.e. that Britain will sell to the value of £80 million in return for Argentine goods to the same amount. In order to get the meat she particularly requires, Britain has also promised Argentina priority treatment in supplies of oil, coal, machinery, chemicals, and other manufactured products, and will export them in sufficient quantities to satisfy most of Argentina’s needs.

So far, so good. On the face of it a useful trade agreement for the British capitalist class, and a triumph for their negotiators, acting, by the way, under the instructions of a Labour government.

But evidently everything has not turned out quite so rosily as expected, for now the United States has come along and objected in quite strong terms that the agreement is actually a very bad one, is going to have the effect of cutting out the United States from the Argentine market, and for quite a long time to come. American exporters, it seems, are most annoyed at all these developments and want their government to do something about them.

Now for the other side of the story. It is common knowledge that the United States has been pouring millions of Marshall Aid dollars into Western Europe as part of her foreign policy. Of these dollars Britain, as the most important Marshall Aid country, has received the largest share. The prime purpose of this aid has been to help the Western European countries to get back on to their feet economically, to assist them to increase production, and to step up their exports. Thus encouraged, the British capitalist class, aided by the Labour government, have energetically set to work (with the co-operation of the British workers), and made great strides in their trade, receiving numerous pats on the back from Hoffman, the Marshall Aid Administrator, for doing so. It seems, however, that Mr. Hoffman has been a little too generous with the back-slappings, for the British capitalist class are apparently carrying out the export policy too well. Having encouraged British capitalists to increase their exports, the Americans are now complaining that they are being cut out of the export market, and with the help of their own money!

There is another twist in the story. Even if Britain did not supply her with the goods she requires, Argentina would not be able to buy from the United States, because she has not got the dollars to pay for them. As it is, she owes America millions and millions of dollars for goods she bought years ago, and the Americans have been trying to get paid ever since. In spite of this, however, the American capitalist class are still prepared to have a row with Britain over the right to send even more goods to Argentina, still presumably without Argentina having the slightest chance of being able to pay for them!

Finally, we cannot resist making a side-reference to oil, one of the commodities involved in the agreement, and the one that is evidently causing the Americans the biggest headache. Only a few months ago, the Americans were still obsessed with the worry they get from time to time that their internal oil supplies were running low, and that they would need to draw to an increasing extent upon supplies from abroad. Thus one of the top priorities in the Marshall Aid programme was for the Western European nations to increase their refining capacity and sell oil to the United States for dollars, so killing two birds with one stone. Again British capitalists set to work with a will, to such an extent that “American companies have already lost part of their Swedish market to British competitors.” (Daily Telegraph, 11/6/49), and look like losing the Argentine market as well. No wonder they are getting upset! What has happened, of course, is that American home demand has been falling off, prices have been dropping, and American companies that thought they would be hard put to supply their home market are now finding it to be in danger of saturation, and that they had better look after their overseas markets while the going is good.

So here are three more problems for would-be solvers of capitalism’s problems to get their teeth into. Solutions should not be sent to us. Send them to the American State Department or Sir Stafford Cripps' or even to President Peron. They will be very glad to receive them, we feel sure.

Stan Hampson

Is the Pound worth saving? (1999)

From the June 1999 issue of the Socialist Standard

Some said it would never happen, yet on 1 January of this year the Single European Currency became a reality. Five months on, we have seen the fall of Oskar Lafontaine, the German Finance Minister, the resignation of the entire European Commission and the Euro steadily fall in value.

Despite all of this, New Labour has started to come off the fence and demonstrate that they are preparing to recommend Britain’s entry to the project, subject to a referendum of course. This policy shift (especially after publishing the National Changeover Plan), has only intensified debate across the country, spawning a plethora of ad hoc organisations, dedicated to both sides of the argument.

Without equivocation, we in the Socialist Party say that the introduction is a capitalist question which has nothing whatsoever to do with the interests of the working class. Our class interests can only be furthered by the abolition of the capitalist wages system and all money no matter which name our masters wish to give it.

The “pro” and “anti” positions span the political spectrum from right to left. Some of the Eurosceptics to be found on the extremes of the Conservative and Labour parties are actually in favour of EU withdrawal, whilst the majority are just hostile to the Single European Currency. In the case of the Europhiles, they can be found anywhere from the Tory left, the Liberal Democrats through to New Labour. It is interesting to note that the vast bulk of the pseudo-revolutionary Trotskyite sects are defending their own variation of the Eurosceptic position.

Ever-increasing concentration

The Euro project is just the latest (but by no means the last) phase of European capitalism’s attempts to compete as an effective unit on the world stage (especially against the US and Japan). This is not just a political project, as the capitalist media likes to make out, but is rooted in the ever-increasing concentration, centralisation and integration of European capital. Indeed, the prelude to the launch of the Euro was littered with take-over activity. This process itself is part of capitalism’s attempt to restructure itself to the needs of the modern globalised economy.

Perhaps, not surprisingly, we find that the most powerful section of the capitalist class (big manufacturing and finance) are generally the ones pushing for Britain’s entry into the Euro. There are the capitalists who have a big stake in Europe either via importing/exporting or providing finance for take-overs.

It does not follow that businesses with extensive European interests who have supported the development of Europe vis-à-vis the EEC and single market EU, necessarily believe the Euro is a good idea in itself. The CBI, which represents big manufacturing capital, is actually quite divided on this issue despite its leadership being in favour. For many members, it’s not the principle of the Euro which is the problem—it is the economics of it. However, some pro-European capitalists take the view that although the single currency is not perfect, they cannot be left out of it. In fact some argue that early membership would have allowed the British government to influence the shape of the Euro project in their favour.

Bearing in mind that the majority of the British public are not Euro enthusiasts, we should expect to see a big propaganda drive over the next year or two from the powerful pro-Euro lobby (which is likely to involve the government). The most popular argument trotted out by the Europhiles is that an integrated Europe will reduce the risk of another European war because Germany will be kept in check. This is a feeble argument which totally misunderstands the causes of war. The fact that superficially Europe’s capitalists are coming together does not alter the fact that they remain competitors and this is only a marriage of convenience. If, due to capitalist logic, the arrangement should break down, no amount of political organisation at a supra-national level will prevent a war. The example of the United Nations demonstrates this.

Following on from this, we are told that from this position of political stability there will be increased economic growth via increased trade and low interest rates and inflation. The logical corollary of this would be a Europe reasserting itself on the world stage, whilst capable of dealing with its own internal balance-of-power. As pro-Euro economist Christopher Johnson argues in his book In With The Euro, Out With The Pound:

“The Euro, with the UK inside it will become a world currency alongside the dollar and the yen. Britain can thus retain, or even regain, some of its status as a world economic and financial power without giving up its national identity.”

Moreover:

“Britain can avoid German domination of Europe only by joining France, Germany and other European countries as partners in an integrated Europe” (p.197).

Quite where Johnson find the facts to support such optimistic economic reasoning is anybody’s guess. It’s certainly not supported by the first five months of the Euro, which has highlighted many of its contradictions. Firstly, there has been the constant bickering between the politicians and the bankers of the European Central Bank (see January Socialist Standard) which resulted in the resignation of “Red” Oskar Lafontaine, the German Finance Minister, and of course the corruption scandal at the heart of the EU Commission which demonstrates the lack of even basic democratic accountability. And as for the Euro becoming a world reserve currency to threaten the dollar—well it hasn’t happened yet. 

Eurosceptics

However, the capitalist class is multi-faceted and some sections are openly hostile to Britain joining the Euro. These capitalists (generally small and medium size concerns) grouped around organisations such as the Institute of Directors and the Federation of Small Businesses see joining the Euro as a costly adventure. The EU “social market” model is derided as an economic anachronism which will not be able to compete against the low cost, dynamic “free market” US and that Britain’s entry into the single currency will effectively spell the end of the Thatcherite revolution.

There is a certain amount of truth in this position. It is clear that if Britain did join the Euro there would be moves to harmonise taxes and costs since British capital would have an unfair advantage over its European rivals. However, it is also true to say that European capitalists have been trying to restructure their own economies for sometime now with attacks on welfare provision and working conditions. The results of this have been violent protests and demonstrations by French and German workers. In reality, Euro capital will try to restructure at home whilst demanding concessions from a British entry.

The Eurosceptics often claim that a single currency with a “one-size-fits-all” monetary policy would inevitably require a single fiscal policy. John Redwood, the Tory arch Eurosceptic, articulated this view in his 1997 book Our Currency, Our Country:

“You cannot have a single currency without a single interest rate, a single banking policy, a single budget and a single finance minister or central bank governor. You are inevitably led to a single taxation policy and a single economic policy. You are close to creating a single government” (Preface).

Although Redwood’s arguments may be more cogent and honest than Christopher Johnson’s, his views are ultimately based upon populist nationalism. Britain would cease to be an independent nation and parliament would resemble little more than a glorified county council under the jackboot of French and German bankers.

This may or may not be true. The question is what difference would this make to the working class? When people like John Redwood start talking about democracy it’s difficult not to laugh.

The main strengths of the “Eurosceptic” position rests on their critique of single currency economics. Firstly, they argue that Europe is not an “optimal currency area” which is a prerequisite for the Euro to be a long-term success. Britain’s trade cycle is synchronised more closely with that of the US and this could cause problems with a common interest rate policy (i.e. German growth may be slowing and Britain’s picking up). This could mean that the currency area was more susceptible to “asymmetric shocks” that could threaten the stability of the entire continent.

Left-wing Eurosceptics with their desire to reform British capitalism have also used “loss of control” arguments. The Campaign for an Independent Britain write in a recent pamphlet:

” . . . opting for economic self governance, rapid growth and full employment means opting out of a single currency” (Burkitt, Bainbridge and Whyman—There is An Alternative, p.65).

It is a supreme irony that left-reformists such as the aforementioned authors and Tony Benn can be on the same side as the Thatcherites, whilst denouncing the Maastricht “Convergence Criteria” and Amsterdam “Stability Pact” for being “monetarist” and “deflationary”. For these people are still labouring under the delusion that capitalist governments can control and influence the economy by using monetary and fiscal policies. They have learned nothing from history.

Clearly, the Tory Eurosceptics (currently under the leadership of William Hague) nominally support the notion of an independent Britain, but in reality represent the pro-US section of the British capitalist class. It is precisely this division between the pro-European and pro-US sections of the capitalist class that will fuel the single currency debate in the coming months.

Indeed, the EU and US seem to be in a perpetual trade war at the moment and such tensions are likely to increase rather than diminish. This makes Britain’s future role even more interesting. If Tony Blair does take Britain further into Europe, how will this affect Anglo-US relations? Perhaps Blair’s strategy will be to play one bloc off against the other?

We have seen the poverty of all the capitalist arguments for and against the Euro and located this debate in its true context. From the petty nationalists to the more “sophisticated” pro-Europeans this is not a debate for the working class. To be “pro-European” or “anti-European” is to fall for capitalist trickery. We should create our own agenda rather than just responding to our masters’ in-fighting. Is the Pound worth saving? A better question would be: Is capitalism worth saving?

Dave Flynn

Cooking the Books: Thieves fall out (2009)

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

When we talk about the capitalist class of a particular country, we sometimes refer to them as “they”. But this can give the impression that they are a monolithic bloc with the same interest. Of course they all share a common interest in maintaining capitalist property rights and the general conditions for capitalist production, such as a working class dependent on working for them to obtain the money to buy things. Beyond that, however, the interests of the different sections diverge.

“American exporters in last-ditch attempt to stop Obama raising the trade barriers” read a headline in the Times (26 January):

“A coalition of leading American exporters, including Boeing, Caterpillar and General Electric, is trying to stop a ‘Buy America’ clause being included in President Obama’s $825 billion stimulus package. The American Steel First Act would ensure that only US-made steel was used in $64 billion of federally funded infrastructure projects. The money, earmarked for roads, bridges and waterways, is aimed at kickstarting the economy, but the initiative by steelmakers, which secured support last week in the House of Representatives Appropriations Committee, is opposed by American exporters, who fear retaliation by foreign governments.”

This represents a clash of interests between capitalists producing for the home market such as, in the US, those with investments in steel production, and those producing for outside markets. The former favour protection, the latter free trade. At the moment the governments of most countries favour free trade as they are haunted by their perception of what happened in the 1930s.

Then, governments put up tariff barriers against each other’s goods, thereby further reducing world trade and so exacerbating the depression. These “trade wars” can even be seen as a precursor of  the real war that broke out in 1939 when the countries that lost out in them, Germany in particular, decided that war was the only way to solve their problem of access to key raw materials and outside markets.

It remains to be seen whether governments will be able to resist pressure for protectionism from capitalist corporations producing for the home market, often backed by the unions organising their workers (Obama did get the proposal watered down). The Daily Mirror is running (yet another) “Buy British” campaign while construction site workers took up the populist slogan Gordon Brown raised at the 2007 TUC Conference of “British Jobs for British Workers”. Dismayed (as he knows very well that as a mainly exporting country most British capitalist firms would lose out if protectionism catches on), Brown tried to back-peddle on his demagoguery, and the BNP was delighted to be able to reclaim the slogan he had stolen from them.

Another division within the capitalist class is between those with investments in actual production and those engaged in various financial dealings. To judge by one incident at the annual Davos meeting of the world’s top capitalists and politicians, these two sections have fallen out big time, with one industrialist calling for some bankers to be jailed:

“John Neill, chief executive of Unipart, was given one of the day’s biggest rounds of applause when he declared that bankers who were involved in developing toxic products that caused massive damage to the global economy should be punished. If you knowingly make other kinds of toxic products, you go to jail. Why should bankers be different, he asked” (Times, 29 January).

Socialists look on at these arguments from outside as hostile observers. We don’t take sides. We don’t support either protection or free trade and we don’t oppose just the banking section of the capitalist class. In the words of William Shakespeare, we say: “A plague on both your houses”.

Cooking the Books: International non cooperation (2007)

The Cooking the Books Column from the February 2007 issue of the Socialist Standard

In the December Socialist Standard we dismissed as quite unrealistic the claim put forward by Sir Nicholas Stern in his report to the government on the economic impact of global warming that, despite measures to cut carbon emissions affecting the competitiveness of different countries differently, this “should not be overestimated and can be reduced or eliminated if countries or sectors act together”.

Perhaps, if countries and sectors could be got to act together. But that’s precisely the problem. Companies from different countries and within different sectors are in competition with each other for a share of world profits. It is not in their nature or interest to act together or let one of their rivals get a competitive advantage over them. If one country or company feels that the adoption of some measure would result in this they won’t agree to it and will try to sabotage its adoption.

Stern’s pet measure to try to reduce carbon emissions was not, as might be expected in view of how serious he says the problem is, coercive legislation to force companies to comply, but carbon trading, or the buying and selling of a decreasing number of permits to emit carbon dioxide. The EU has already established such a scheme which has been functioning, not too successfully, since 2005. It is due to be renewed, in theory in a beefed-up form, from 2008 for a further four years.

At the moment it is essentially only power stations that are covered but the EU Commission is now proposing to extend it to other sectors, including air transport. Under a draft proposal published on 20 December, as from 2010 airlines would be required to record their carbon dioxide emissions and from 2011 would either have to keep their emissions down below a set level or purchase permits to emit more. This would initially apply just to flights within Europe but from 2012 will be extended to all flights leaving or entering Europe.

The airlines are not happy (except with the rather generous levels of emissions permitted). British Airways says that applying the scheme to flights going outside Europe will undermine its competitiveness. A BA spokesman declared: “It would disadvantage all EU long-haul carriers against their competitors around the world. All our flights would be covered but, for a US carrier, it would only be a small proportion” (Times, 16 November).

The Association of European Airlines predicted it would lead to “trade wars” while the US Air Transport Association said it “violated international law”. The US association added that such a scheme was unnecessary anyway as airlines were already taking adequate steps to reduce emissions.

That’s more like capitalism. Trade wars. International disputes. Denials that there’s a problem. If Stern’s warning in his report about what will happen if nothing or too little is done is not just scare-mongering, capitalism offers a truly disturbing future: “Our actions over the coming decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression.

Trade wars (1993)

From the April 1993 issue of the Socialist Standard

At a recent meeting at the White House, President Clinton promised John Major that he would "try to make the GATT accord succeed" (Financial Times, 25 February). Subsequently. however, both he and his Secretary of State. Warren Christopher, were less conciliatory in their pronouncements.

Speaking to students at Washington University. Clinton said “we will say to our trading partners that we value their business, but none of us should expect something for nothing". Warren Christopher, addressing NATO foreign ministers, referred to “a new diplomacy that views domestic and foreign issues as inseparable. Wc will elevate us economic security as our primary foreign policy goal” (Daily Telegraph, 27 February).

The North America Free Trade Agreement, the supposed US answer to the European trade bloc, has resulted, however, in the use of cheap labour in Mexico by American industrial manufacturing companies with resultant lay-offs in the corresponding industries in the US.

The United States is constantly calling for a “level playing field" with the other major capitalist powers. This ignores the fact that America has imposed import duties on steel, wine and cereals. The volume of US exports abroad expanded by 74 percent between 1985 and the first quarter of 1992, compared to increases in German exports of 28 percent and those of Japan by less than 20 percent (Financial Times, 10 February). So the "cooperation" that Clinton and Christopher are demanding is really a greater share of the world market.

Barriers

In Europe the promises of prosperity based on an expansion of trade with the former Eastern Bloc countries has given way to the worst recession of the post-war period. Nor has the German economic miracle that was to follow the unification of the two former German states materialised. Instead. Europe now has increasingly bitter internal conflicts over jobs, trade, currencies and interest rates. The volatility of the two latter is indicative of the failure of the larger market to produce convergence or stability.

The average level of unemployment in Europe has risen to 10 percent. Recently 7000 German steel workers demonstrated against proposed job cuts. Car manufacturers in western Europe have drastically cut costs by restructuring plants and laying off workers. Far from stimulating trade, the EEC has put up barriers, particularly to countries such as Poland and the former Czechoslovak Republic whose labour costs are lower (hourly rates for car workers are about one tenth of those of western German workers). Exports to the EEC from the former Eastern Bloc countries have increased to 19 percent during the past half-year. Czech exports to the EC alone rose 10 percent last year to 51 percent of the new regime's total exports. Restrictions on textiles, farm products and cement imports already exist and it is anticipated that these measures will shortly be extended to steel products from Hungary. Poland and Slovakia.

Western capitalist politicians who welcomed the break of the eastern European states with the Soviet Bloc as a triumph for democratic capitalism which would lead to an economic boom are now erecting a reverse version of the Berlin Wall by creating trade barriers.

Japan and China

Japan, a country involved in a worsening slump, is frequently the object of exhortation by American spokesmen to lower its trade barriers on industrial goods as well as rice imports. Industrial production is falling, bad debts are increasing rapidly as property values continue to slide whilst banks struggle with at least 100 billion dollars of doubtful loans. For a country in this position to lower import barriers so as to admit manufactured goods could only worsen a rapidly-deteriorating situation. Domestic sales of cars fell by 7.2 percent in 1991. Importing Fords and Chryslers will hardly mitigate the problem. Against this background Japan can offer a market for little else than Japanese goods. As an export dependent country to an extent greater than its rivals, Japan has no alternative other than to struggle for an outlet for Japanese manufactured goods.

One country whose production is rising rapidly is China which is already beginning to seek an outlet for its manufactured goods on the world market. As it is, China’s exports to the United States are rising and this is causing tension:

  The Americans have made it clear that GATT membership for China will not lay to rest the provisions of America’s own laws that make China’s most-favoured nation (MFN) status a perennial subject of dispute. The Clinton administration’s China policy is still unformed, but it seems likely that human rights, Chinese arms sales and China’s huge trade surplus with the United States (more than $18 billion last year) will all crop up yet again in this years’s MFN debate. (Economist, 6 March).

Already the US trade negotiator Douglas Newkirk has gone on record as saying that ’’China and America are further apart now' than they were before the talks were broken off in 1989”.

What we are witnessing is the division of the world into rival trade blocs where the major powers are following the “beggar thy neighbour policies” of the 1930s. Far from stimulating world trade this can slow it down drastically. All the high-sounding phrases such as “free trade” and “cooperation” are merely attempts to dress in respectable language the struggle of the various capitalist powers to grab a bigger share of the world’s markets.

Many observers have draw n parallels between the present world economic crisis and the Great Depression of the 1930s. The Wall Street Journal (15 February) recalled that Cordell Hull, United States Secretary of State under Franklin D. Roosevelt, had said in 1937 "I have never faltered and will never falter, in my belief that enduring world peace and the welfare of nations are indissolubly connected with friendliness, fairness, equality and the maximum practicable degree of freedom in world trade”. Thus the same nebulous phraseology was being used then as the modern politicians are using now. One other more significant quote is attributed to Hull in the same article, and is said to be heard nowadays in the corridors of GATT headquarters in Geneva, "that when goods don't cross frontiers armies do”. War commenced in Europe two years later.

The present crisis and trade war exemplify the anachronistic nature of capitalism in terms of social development. Marx saw the contradiction clearly:

  The enormous power, inherent in the factory system, of expanding by jumps, and the dependence of that system on the markets of the world, necessarily beget feverish production, followed by over-filling of the markets, whereupon contraction of the markets brings on crippling of production. The life of modern industry becomes a series of periods of moderate activity, prosperity, over-production, crisis and stagnation . . . Except in the periods of prosperity, there rages between the capitalists the most furious combat for the share of each in the markets. (Capital, Vol.1. chapter 15, section 7)

The present trade war cannot be ended by GATT, NAFTA or G7 summits. It will continue in one form or another as long as world production is organized to produce primarily for profit rather than use. The present mode of production can no more function without trade conflicts than it can without world slumps as we have today.

Terry Lawlor

The Four Tigers (1988)

From the July 1988 issue of the Socialist Standard

  A weary Asia out of sight  

Is tugging gently at the night  

Uncovering a restless race; 

Clocks shoo the childhood from its face.

W.H. Auden

A trade union demonstration in Singapore is a rare sight; one protesting a decision of the United States Congress is unheard of. That it was permitted is a measure of the government's concern at Singapore's inclusion with South Korea, Taiwan and Hong Kong as one of the Four Tigers allegedly threatening the economic life of the US. and therefore scheduled to have its GSP privileges withdrawn on 1 January, 1989. The Generalised System of Preferences allows free or low-tariff imports of certain goods into the US; Japan and the EEC have similar schemes. Its purpose is. ostensibly, to encourage the trade and economic development of Low-Developing Countries. But trade is at least a two-way business, and developed countries are involved as much for the purpose of their economic health.

Growing up in capitalism is a painful affair, as any worker knows. Having successfully responded to the urging of their US mentors to modernise and achieve newly industrialised country status, these LDCs are reaching out for some of Uncle Sam's bourbon and cigars and have been told that they will be "graduated" from their trade privileges as a consequence.

The present trade deficit of the US. and its changed role from creditor to the world's heaviest debtor nation, is something that capitalism's supporters would have found difficulty envisaging ten years ago. Some blame Reaganomics, but this cannot explain how the exceptional economic superiority of the US after the Second World War appears to be progressively deferring to the rapid growth of Europe and Japan. Although persistent trade imbalances can be reversed and do not indicate the permanent demise of a country's economic strength, it does seem that the automatic assumption of US economic hegemony is being challenged by the development of capitalism itself in the shape, in this instance, of the Newly Industrialised Countries.

Asian NICs
These countries have all experienced colonial status and their development in the last decade has been outstanding. The UN Economic and Social Commissioner for Asia and the Pacific states that the Four Tigers achieved a remarkable 11.7 per cent growth in real GDP in 1987. Even the growth at 5.7 per cent of another Asian ex-colonial LDC, the Philippines, exceeded that of the most developed countries. And despite the continued general slowdown in world economic growth projected by the IMF at 2.9 per cent this year, the Tigers' expansion rate, in keeping with ESCAP's regional projection of 5.6 per cent, is expected to continue well above those of developed countries.

The scheduled withdrawal of GSP privileges is an example of increasing US protectionism which highlights the international nature both of markets and investment capital. The Singapore American Business Council's call on its government in Washington to reconsider withdrawal, argued that cheap imports of Singapore products into the US — in particular from their own factories in Singapore — help lower costs in US-finished products, increasing US competitiveness. In a demonstration of their capitalist maturity, the NICs took immediate steps after the announcement to support their separate economies. Trade delegations between the Tigers followed, as well as between them and areas such as India, Pakistan and East and West Europe. And Taiwan and South Korea, with a competitive eye on China's cheap and abundant raw materials, agreed to reverse their previous trade policy with her and to open their markets.

The role of the Tigers' exports in the US trade deficit is an indication that capitalism can still develop increasing productivity and output, and that industrialisation still results from investment in low-wage areas. US, Japanese and EEC capital have played the major part in this.

But the Four Tigers represent only part of the picture of Third World development in East Asia. Thailand, better known for export of rice and rubber, now exports Japanese cars, its manufactured products swelling from two per cent to 60 per cent of exports in 25 years. With the highest growth rate in the ASEAN group of six countries, and an IMF forecast of a seven per cent annual growth until 1991, she is expected to become the next NIC. Like the Tigers two decades earlier, Thailand has a flourishing labour-intensive textile industry with low wages — about US$3 daily. The increasing use of machine-intensive industry, staffed round the clock by an adaptable, young labour force, could well follow their pattern by keeping labour costs low and the economy competitive. At one-third of the cost, industrial productivity almost equals that of South Korea. Already a magnet for US and Japanese capital, investments now flood in from the economies of the Tigers and the EEC. to share in the fruits of exploitation.

Malaysia, another ex-colony attracting foreign investment, has urged Singapore and Taiwan, already the second and third largest investors in the country behind Japan, to avoid GSP restrictions by relocating their industries there, stating its aim as wanting to form an "economic power to replace the weakening US and EC markets". Its manufacturing sector's growth of 12 per cent, and its 69 per cent growth in trade surplus in 1987, reflect the surprising fact that Malaysia is now a significant producer of electronic and electrical goods, and that machinery and transport equipment head both its import and export lists.

Keeping a watchful and wary eye on these developments — and on her trade surplus with the NICs — Japan is in the forefront of OECD moves to include them in a new Pacific OECD. However, they already account for 25 per cent of the US deficit, and as they turn to the EEC to avoid US protectionism, the European trade situation could worsen. Expected by OECD to surge past Japan's surplus, and to double that of the EC and EFTA combined in 1989, it is not surprising that their inclusion in economic dialogue is seen by Japan and the other major powers as essential.

When Auden wrote the lines at the head of this article, much of Asia and the Pacific rim were colonies. Fifty years and decolonisation have passed, and many countries seem ready to move into what is referred to in Singapore as the "chopsticks century", as fully-fledged capitalist powers experiencing the same competitive pressures. As exploitation in South Korea intensified. leading to a series of strikes and a 20 per cent pay increase last year, suicides among housewives increased sharply. And in a rare demonstration of strength and solidarity, Thai workers in reorganised unions are demanding a social security system from birth to death.

Increasing US protectionism, and the anticipated strengthening of EC external tariffs with the community's impending economic unification, have led to calls for an Asian Common Market. We are not in the business of making predictions, and treat economists" forecasts with a caution derived from our knowledge of capitalisms' economic anarchy. Whichever scenario obtains — free trade or protectionism — Asian workers will indeed have lost their childhood.

Bill Robertson

Peace—Competition—War. (1919)

From the August 1919 issue of the Socialist Standard

On the day the Press was gushing and frothing over the spectacular peace-signing business (30.6.19) the "Daily News" published an editorial on the matter, and also several articles by those they designate "Great Men." The articles in question are best summed up as a conglomeration of contradictory vapourings.

In its editorial the "Daily News" sends up a hymn of thanksgiving that "the world has won its freedom," and then goes on to make the following curious remarks:

  "We are friends to-day with France, and our sincerest prayer is that that friendship will never be broken. . . . . She is again the most formidable figure on the Continent. She, almost alone, stands erect and triumphant over the ruins of Empires.  We rejoice in her miraculous recovery ; but we should be fools to blind ourselves to the implications." (Italics mine.)

These sound pacific words ! What is the nature of the implications to which we must not blind ourselves? Of course the nature is the old capitalist nature. The crushing of Germany has strengthened the commercial power of France—one of the competitors in the rush for the world's markets.

The article goes on further to enlighten us :

  "And is there anyone who looks to Japan and the Far East without large and vague apprehensions ? Or Westward across the Atlantic without wondering what the future has in store there and realising, however dimly, that if the United States is compelled to forsake its historic pacifism for militarism it is sea power which will be its capital concern."

Undoubtedly the above shows that the present peace is to be a lasting one ! The subscribers to this view have evidently studied the relativity of all things, and the meaning they attach to "lasting" is a day or two—or rather its a lasting peace until the next great war !

The idea of setting up America with her gigantic naval programme as a pacifist nation, is truly comical. In the last twenty-five years America has been at war with Spain, the Phillipines, China, and Germany, to say nothing of the murderous slaughter of American working men in the various strikes. At the moment of writing it is announced that America contemplates the construction of two liners larger than anything afloat, and so constructed that they are easily convertible into commerce protectors.

The Peace Treaty receives anything but a glowing reference from the "Daily News." "It does not aim at abolishing militarism ; it aims at abolishing Prussia," is their tribute to the efforts of Lloyd George & Co.

After mourning over the defects of the Peace Treaty the article hails the "League of Nations" as the new deliverer and the promise of a glorious future. It then proceeds to knock the bottom out of the League with the following remarks:

   "There are grave defects in this momentous document. The provision that unanimity is required for action is the most disquieting of these defects."

And we might tack on this the fact that, so far, the League consists mainly of England, France, and America, and excludes the Central Powers; also that the nations composing the League are laying themselves out for more efficient predatory forces than ever, as witness America's mighty warships, Britain's gigantic airships and flying machines, and the recent big armament combine, Explosives, Ltd.

Things certainly look promising !

From the other articles, in the same paper, already alluded to I will extract some of the wisdom of the "Great Men."

Sir Walter Runciman writes :

  "Now that peace is signed, the first necessity for the British Empire and for the whole world is to get trade going everywhere. . . . Only by a full stream of trade can the flow of food and goods between all peoples wipe out hunger, misery, and unemployment, and possibly anarchy."

Capital lying idle is unfruitful, but capital employed in trade brings in rich returns, hence the anxiety of the profit seekers to get on with the business. That a full stream of trade will will wipe out hunger, etc., is the usual delusive humbug of the employing class. Just prior to the war trade was booming everywhere. Statistics showed relatively higher returns than ever before, and yet the lackeys of the master class (Lloyd George among them) admitted that there was greater poverty and misery existing than any previous records showed. For years the number of inmates in the lunatic asylums, and the number of homeless on the streets of London, had been growing. With the improvement in productive processes and machinery, and the increase in the number of women in industry, brought about by the war, we have far worse times ahead when trade booms again.

Another writer, Dr. Clifford, says:

 "The seed of new wars are sown with a prodigal hand. . . . An economic struggle is to follow the military, and an international trade rivalry is arranged to block the way to international co-operation and reconciliation."

As he correctly states, the seeds of new wars are already sown—the seeds of war exist in the very marrow of capitalism. The economic laws governing capitalism drive different sections into trade conflict, and it becomes a question of the eclipse of a particular section or a trial of arms.

The seeds of new wars are not hard to discover. While England has been deeply involved in war, America has been restoring her shipbuilding industries, which were previously decaying, and now ranges herself against England as a powerful competitor in the shipbuilding and carrying trades.

At the recent coal enquiry competent witnesses expressed the fear that in the future America and France would be serious competitors in the iron and steel trades.

For some years Japan and America have been in a state of doubtful friendship in their competition for the Chinese trade. Latterly China has been developing rapidly, and may soon be able to supply a great part of her own needs, and also compete abroad. We may witness the spectacle of Japan and America at each other's throats over the Chinese market, and either or both at the throat of China to force her to accept their goods.

Japan is becoming yearly a more serious competitor in European markets, and "cheap German muck" may yet give place to "cheap Japanese muck."

In a note relating to a conversation with a "well-known authority in the City," headed "Japan ready to sell," in the "Daily News" (9.7.19.) the following appears :

   "Japan is manufacturing all the fancy goods, the cheap crockery, the toilet and clothes brushes, and the thousand-and-one little knick-knacks that used to come from Germany and Austria. . . . The Japanese are making just those goods which we formerly imported from enemy countries on account of their cheapness."

A writer in the "Penny Magazine" during the last two months also points out that Japan, India, and America are steadily encroaching upon England's cotton trade. Modern inventions have deprived Lancashire of the advantage she formerly possessed in her humid atmosphere. As the other countries possess the raw material (and Lancashire does not) and can produce the necessary atmosphere artificially, Lancashire is going downhill and may be crushed out of the trade eventually.

That "our staunch ally," Japan (who is pinching our trade!) has learnt from the experience of the leading nations, and is developing her industries and piling up her wealth strictly in accordance with capitalist tradition, is borne out by the New York special correspondent of the "Daily News" (16.7.19.) in the following quotation relating to Korea :

"The regular use of torture, the establishment of compulsory prostitution, the promotion of the opium traffic, the suppression of free speech, the repeated flogging of women, the massacre of scores of unarmed people at a time when no disturbance was proceeding, and many other atrocities indicate that Japan should spare no effort to dismiss officials responsible and completely change her attitude towards this problem.
Already Japan is confronted with the Chinese boycott, which tends to substitute American for Japanese trade. Her Korean policy must inevitably determine her position in the Far East, and beyond all question the cruelties practised in Korea have caused indignation here."

If Japan continues to forge ahead it can easily be seen that she may soon become an "enemy country" so far as the other leading capitalist nations are concerned. The recent disclosure by President Wilson of the secret treaty between Japan, Germany, and Russia, if true, shows that Japan is well up to her rivals in the unscrupulous scramble for markets.

In spite of the ringing of the joy bells of peace England is still at war in India and Russia.

India, as well as pinching our trade, is developing in other directions. She is the world's greatest producer of hides, and the only producer of jute, while her export of manganese and tungsten materially affects the manufacture of steel in Europe. Such a prize must be retained at all costs.

A side-light on the intervention of England in Russia is given in by Sir A. Steel-Maitland when addressing business men interested in Russian trade. He said:

"In the next 20 years the part of the world where trade expansion was likely to be quickest was in Central and South-Eastern Russia, and the enormous belt of country east of the Urals. British traders now had a good chance of establishing themselves there." —"Daily News," 12.7.19.

In "The World's Work" during the war Mr. R. C. Martens (of Martens & Co., a large American commercial concern) contributed an article and a series of maps relating to the resources of European and Asiatic Russia. In the course of the article he made the following remarks :

"The war has caused American manufactures to double at least. Most other countries have also expanded their manufacturing capacities with the result that the world's manufacturing capacity is at least three times as great as it was before the war. . . . Will the industrial nations not have to look for markets for their surplus in lands where there is greatest natural wealth ? If so, Russia will assuredly be the greatest commercial field in the world at the end of this war."

And he closes the article with this significant remark:

  "The opportunity is waiting."

No wonder England and the "great democracy of the West" are taking such a fatherly and bloodthirsty interest in Russian affairs.

The "Daily Chronicle" for August 6th adds its quota to the mass of evidence supporting our contention. Under the heading "Tariff War Breaks Out in Europe" our contemporary reports:

  ". . the introduction into Italy of hats, caps, gloves, and umbrellas is wholly forbidden. So, too are threads, textiles, and all semi-manufactured goods, whether in wool, linen, cotton, hemp, or jute.
The same applies to agricultural machinery and to . all parts thereof.  . .

BOHEMIA'S COUNTER TARIFF.

. . Already Bohemia has retaliated on the shutting out of her glass wares by imposing a steep tariff of 300 kronen on Italian wines."

The report then goes on to declare that there is every prospect of Sweden, who had made the promised supply of paper pulp dependent upon the admission into Italy of certain cheap paper goods, retaliating by stopping the paper pulp supply. Truly, we are a happy family in these days of universal peace !

As the military war waned the trade war took its place and rages with greater violence every day. The inevitable result will be another recourse to the battlefield.

So that the last doubt may be dispelled from the minds of readers as to the everlasting nature of the "peace" I will conclude with another quotation from the "Daily News" (12.7.19.)

  "Sir Douglas Haig and Admiral Sir Roger Keyes received the freedom of the city (Aberdeen) to-day, and also honorary degrees of the University. Sir Douglas, in reply, urged that every growing lad should be taught the use of the rifle, so that when the next great trial came, "as one day it surely will," we should be found a nation in arms, ready and prepared to meet it."

As the Socialist Party has all along pointed out. the wars of civilised countries, since the birth of the capitalist system, have been caused through the struggles between sections of the world's capitalist class for the trade routes, raw materials, markets, and the like. As long as there is commodity production, buying and selling, with the consequent competition among buyers and sellers and the enslavement of the producing class, wars are of the very essence of things. Lasting peace can only arrive when the private ownership of the means of living has been abolished and common ownership has emerged from the ruins—in other words, wars and all the other evils that are a consequence of capitalism can only disappear when capitalism gives place to Socialism.

Gilmac.