News in Review: Wall Street slump (1962)

The News in Review column from the July 1962 issue of the Socialist Standard

Wall Street slump

Wall Street got the twitch last month and so did London and the Bourses on the Continent. The newspapers rushed out pictures of the panic in 1929 and then had to set their City Editors to work to explain why 1929 cannot after all happen again.

Everybody seemed to have forgotten that just before 1929 the financial experts were assuring us that the crash which was in fact just around the corner could never happen anyway. If this does not make the experts of 1929 look very impressive in retrospect, it must also teach us that the forecasts of all capitalism's economic experts are not worth very much.

Nowadays the experts are fond of pointing out the precautions which (they are confident) would prevent a runaway boom like the one which preceded the 1929 crash and therefore (they reason) would also prevent the crash itself.

This ignores the fact that slumps are not the result of an attack of jitters on the Stock Exchange; rather is it the other way round. Nineteen-twenty-nine was one of capitalism's classic crises and no amount of stock juggling could have averted it.

Nor should we assume that hotheaded speculation is dead. The Observer correspondent in New York reported that the “intellectuals" of Wall Street thought that: “By the end of last year the market had reached heights that brokers now, without blushing, describe as insane." and quoted one New York broker:

"The way some of (the big brokers) have been pushing over-priced stocks at naive investors is nothing short of criminal."

Perhaps a repeat of 1929 is not so impossible after all. For some of the experts were mystified by Wall Street’s 1962 twitch. The Guardian said: "The continuing retreat is puzzling commentators in that there seems to be no apparent reason for it. Mr. Walter Heller, President Kennedy's economic adviser, said there were no economic grounds for the condition of the market." Does this fill us with confidence that capitalism’s economists could not be taken unawares by a repeat of 1929? It does not.

Capitalism could have something up its sleeve, just as it had thirty-three years ago, to surprise the experts and impoverish the rest of us.

Liberal Party promises

Nobody can accuse the Tories of not being worried about the Liberal revival. Faced with the fact that some of the electorate undoubtedly find the Liberal Party attractive, the Conservatives have set out to prove that the very allure of Liberal policy lies in its irresponsibility.

This is being done in the time- honoured way of accusing the Liberals of pushing vote-catching policies without also mentioning that they would increase taxes to finance them. Mr. Iain Macleod has estimated that full application of the Liberal policy would put another eleven shillings on income tax. Most workers are convinced that they are the people who pay taxes: to them, the prospect of a standard income tax rate of 18/9d. in the pound must have seemed like black nightmare.

To back up his case. Mr. Macleod had his research boys dig out some choice examples of Liberal promise-mongering. He quoted Liberal policies for spending more on roads and education, for increasing pensions, repaying post-war credits and much more besides. The Liberals claimed that Macleod‘s quotes were taken out of context.

Yet in one way Macleod had a point, even if he did not know that he was making it. All capitalist political parties have to make a lot of attractive promises and boast that they can do things which they know are beyond their abilities. The Tories, for example, said in 1951 that they would stop prices rising.

Such promises can be effective vote-catchers. The one snag is that a party which is liable to be returned to power cannot make its promises too extravagant, because that would only make their betrayal that much more obvious. On the other hand, the more remote from power a party is, the more reckless its promises can be. The Liberals have little immediate prospect of becoming the government of British capitalism.

We may be sure that if the Liberal revival really gets under way their promises will become dimmer and more sober as the votes mount up. And if they ever get into power again most of the promises will disappear. Grimond and his men would run British capitalism in roughly the same way as the parties they now decry.

End of Eichmann?

No time was wasted, after the Israeli President bad written the quotation from the Bible across the petition for reprieve, in sending Adolf Eichmann to his death and scattering his ashes into the sea.

Why was Eichmann executed? For revenge? One man cannot adequately expiate the murder of six million people; a split-second execution is hardly revenge for the years of pitiless concentration camp horrors.

P

erhaps nearer the mark were those observers who think that the whole thing—the abduction, the trial, the execution—was meant to establish Israel as a political reality among the other capitalist nations. Political acts in themselves do have significance and for Israel to put to death the man who organised the extermination of the Jews is significant indeed.

Israel has asserted her power—even if, in terms of capitalist legality, she had little right—to bring the Jews' tormentors to book.

But what else has Israel done?

Perhaps she has made a martyr of the clerk-like Eichmann. Racial theories still live in capitalism's jungle; the execution of Eichmann could be the grain of sand around which they crystallise and flourish.

There is no easy explanation of the Eichmanns of the thirties and forties; Nazi Germany will remain a horrifying enigma for a long time to come. But we can say that part, at any rate, of the reason for the electoral success of the Nazis was the crisis of German capitalism after 1918 and the despair and cynicism which this bred in the minds of the German working class. In this mood, they would have supported anyone who sounded as if he had the answer to their problems. And Hitler, with his race mania, sounded like that to them.

Capitalism is always liable to convulsion and in any case it will never stop looking for scapegoats for its own shortcomings. This means that racial hatred is still with us and that even the madness of the Nazis need not be very far away.

The world may not have seen the last of its Adolf Eichmanns.

Coal profits

The nationalised coal mines made £28.7 million operating profit last year. If the Coal Board were a normal commercial company, said chairman Lord Robens when he announced these figures, it would be paying a dividend of 2½% from its profits.

But the coal mines are not, of course, a normal concern. The N.C.B. is liable to pay out on fixed interest stock and loans, which means that its dividend payments bear no relation to its working profit.

Last year the N.C.B’s interest payments came to £42.4 million, which turned its working profit into an accounting deficit of £13.7 million.

There are three things to be said about this.

Firstly, nationalising the coal mines was obviously a good move from the point of view of those who get the £42.4 million interest from a profit of only £28.7 million; much more than they would have got from Lord Robens' two-and-a-half per cent!

Secondly, the fact that millions of pounds profit is being wrung from the coal mines is proof—if anymore were needed—that nationalisation does not alter the capitalist nature of society. For profit, in private or state industry, can only come from the exploitation of workers in the industry.

Which brings us to the third, conclusive point. Many workers in this country were misled into supporting nationalisation because they thought it had something to do with common ownership. The figures which the National Coal Board has produced, and those which the other nationalised industries turn out year by year, show up that it was nothing of the kind.

Voice From The Back: Poverty Recruits (2008)

The Voice From The Back Column from the December 2008 issue of the Socialist Standard

Poverty Recruits

“The economic crisis could help the military recruit and retain troops, Pentagon officials said Friday, potentially ending years of extraordinary bonuses and waivers that have become necessary to keep enough troops to fight two wars. “We do benefit when things look less positive in civil society,” said David S.C. Chu , undersecretary of defense for personnel and readiness.” (Yahoo News, 10 October) In other words, when young workers are desperate enough they join the armed services. The best recruiting agency for the armed forces is poverty. You need to eat? – go kill. That is capitalism for you.

War is Mental

We are all familiar with the TV ads for the British Army that portray an exciting, fulfilling career but what many of the impoverished youths at whom the ads are aimed may not be aware of are the following facts. “The number of British military personnel discharged from the armed forces following a nervous breakdown has risen by 30 per cent since the start of the Afghan war. More than 1,300 have been medically discharged since 2001 when operation first began against the Taliban, new figures revealed. Of these, 770 belong to the army, which has borne the brunt of overseas operations in Iraq and Afghanistan. …The rising numbers of service personnel leaving for psychological reasons will fuel concerns that thousands of soldiers face being traumatised by their experiences in Iraq and Afghanistan. Health charities claim that as many as one in 10 soldiers will develop a mental health problem from the horrors of combat.” (Observer,19 October)

 

The Same Difference

Amidst the misguided euphoria about the election of a Democratic Party president it is a sobering thought that whether there is a Republican or Democratic legislation capitalism carries on as usual. “Although there is a widespread belief that Wall Street prefers Republican presidents, most studies show that the market has actually done better under Democrats. Since 1901, the Standard & Poor’s 500 index rose 7.2 percent a year on average under Democratic presidents and 3.2 percent under Republicans, according to Ned Davis Research. Looking at a more recent time period – 1944 through mid-2008 – the S&P was up 10.7 percent a year on average with a Democrat in the White House versus 8 percent with a Republican, according to International Strategy & Investment.” (San Francisco Chronicle, 4 November) Changing the ruling party doesn’t change the exploitation system that is capitalism.

 

Another Market Guru

Mr Brown blames the unregulated stock dealers, Mr Cameron blames Mr Brown and socialists blame the slump/boom cycle of capitalism, but here is someone with yet another explanation. “From his base in India’s financial capital Mumbai, Raj Kumar Sharma has been tracking the turbulence in the world stock markets and has come to one firm conclusion — it was written in the stars. As an astro-finance specialist, he has made a career on predicting whether the Bombay Stock Exchange, Nasdaq, Dow Jones or FTSE-100 will go up or down by studying favourable or unfavourable planetary alignments. Where many blame banks overstretching themselves or inadequate financial controls and policy, Sharma sees a clash between fiery Saturn and its arch enemy Leo as a key factor in the recent financial turmoil. ‘Leo is the sign of the sun and the sun is the father in Indian astrology,’ he told AFP. ‘But the son (Saturn) and his father (the sun) don’t get along, so whenever they are sitting in the same house together, they always fight and create ill-will and danger in the market,’ he said.” (TIME.com, 16 October)

 

Vatican Bonuses

“The Vatican has reintroduced a system of clocking in, nearly 50 years after it was last phased out. Senior clerics will have to swipe plastic cards when entering and leaving, all in a drive to improve time-keeping and efficiency. … Lay and ecclesiastical staff working in the tiny city state, are now using the swipe cards. The cards have been issued to everyone from the lowest office staff to the heads of departments, even if they are priests and archbishops, though there has been no mention if Pope Benedict XVI carries one. …It is all part of a drive to increase efficiency and to make the Vatican more meritocratic. Next year there are plans to introduce performance-related pay.” (BBC News, 3 November) Capitalism is a social system that needs concepts like “performance-related pay”, but we wonder how it will operate in the Vatican. One miracle equals how many euros? Two visions equal more or less than one miracle? We foresee some difficulties when disputes go to arbitration.

Voice From The Back: Our unelected bosses (2003)

The Voice From The Back Column from the December 2003 issue of the Socialist Standard

Our unelected bosses

We are often told that we live in an egalitarian, democratic society, where we can tell our leaders what to do, and if they don’t do it, sack them. In a political sense there is some truth to that, but, when it comes to wealth and control, capitalism leaves us all powerless. A good example of this was recently supplied by a survey conducted by the Times (15 October). They analysed the personnel of the FTSE 100 boardrooms and showed the immense power that these unelected men and women have over our lives.

“None of the people included in the Power 100 is a household name. Few are all that well known among close followers of business and stock market affairs. The most powerful man, Sir Robert Wilson, is more likely to elicit a response of ‘who he?’ than sage nods of familiarity.”

Here are some of the entities under his control (with his salaries in brackets). Chairman of Rio Tinto (£1,410,000), non-executive director Diageo (£68,000), BG Group (£35,000). Such people decide where factories and offices are built and where they are closed. They decide whether you work or not and inside capitalism you are powerless to do anything about it. Some democracy. Some equality.

The killer system

In 2000 the UN pledged to cut the death rate for the under five year olds by two-thirds and halve the number of people suffering from hunger, but now concede that these targets are unlikely to be realised because of the import of subsidised Western food with the consequent ruin of under-developed countries’ farmers and cuts in aid programmes. In the most scientific survey held to date Unicef have revealed a heart breaking picture.

“More than one billion young people in the developing world are now living in conditions of severe deprivation, according to a report for the United Nations Children’s Fund (Unicef). Tens of millions of children in developing countries still do not have access to basic human needs such as food, water and sanitation, the study found. …. Professor Dave Gordon from the University of Bristol (one of the repor’ts authors) said: ‘Many of the children surveyed who were living in absolute poverty will have died or had their health profoundly damaged by the time this report is published, as a direct consequence of their appalling living conditions’” (Independent, 22 October).

One billion reasons for getting rid of capitalism. One billion reasons for organising for socialism.

Market in misery

The misery that is capitalism is summed up by the desperate plight of workers in Moldovia selling their kidney in order to survive.

“’Every month someone walks into my office begging to sell an organ,’ says Dr Adrian Tanase, of the Renal Transplant Section in the City Hospital of Chisinau. ‘This has not been done for a long time in developed countries but here you buy or sell everything.’ …. The demand for kidneys is as strong as ever and the poverty in this virtually lawless main donor country is deepening” (Times, 25 October).

A rotten system

Capitalism is a system based on exploitation so it is hardly surprising that those respectable men in suits on Wall Street are up to their elbows in fraud and deception; but don’t take our word for it here is one of their top dogs on the subject.

“Mutual-fund managers have suddenly joined the long parade of suits in handcuffs that began with Enron two years ago and has led to monster fines, complex trials and a video of at least one multimillion-dollar toga party. It was bad enough when mutual-fund returns were pummeled by a two-year-long bear market that started to thaw only this spring. Then, in September, a few funds came under fire from New York State attorney general Eliot Spitzer for allowing big, sophisticated investors to game the system. The abuses are turning out to be so prevalent that regulatory officials predict a big shake-out. ‘There are going to be criminal cases brought in considerable number down the road’, Spitzer told Time. ‘It’s not one or two bad apples. The whole crate seems to have gone rotten’”(Time, 17 November).

High anxiety

We all have to face the problems of mortgage payments, credit card debt, fear of redundancy and just the day to day grind of working inside capitalism; so the following is probably no great surprise.

“Britain is becoming a nation kept artificially happy by pills, with doctors handing out eight million more prescriptions for depression, anxiety and stress than five years ago. About two million people are estimated to be taking anti-depressants every year, costing the NHS more than £380 million, according to government figures” (Times, 20 October).

Capitalism seems to be driving an awful lot of us round the bend.

The Croupiers and the Faro Wheel. (1940)

From the April 1940 issue of the Socialist Standard

Throughout the political system of British capitalism, with its amazing fluidity, its shifts of front and of allegiance, and its apparent contradictions, runs one clear thread: the idea that there are insiders and outsiders.

So says “The Unofficial Observer,” in his work, “Our Lords and Masters.”

The “outsiders” may get the best jobs, if it suits the purpose of the “insiders,” but they can never determine policy.

For behind and beyond the British political scene there is a superior force, which assigns values, which enumerates—or rather takes for granted—”the things no feller can do,” which pulls the wires and decides events. With Americans that power has been the business and financial community, with its tradition of general corruption and its innocent conviction that individual greed is the yardstick of social utility. That such is not the case in Great Britain can be proved at a single glance at the leaders of British industry and banking. Where American bankers oppose and criticise, where American steel magnates defy Governmental labour legislation, where American oil companies have juggled with administration after administration, British industry and finance work hand and glove with British government. It has taken some consideration above the holding of political office and the fattening of the pocket-book to accomplish this result. There are “insiders” in British business as well as politics. Why?

Snobbishness is what helps to make the wheels go round and induces the lamb to go to bed with the lion on the breakfast-for-two basis. For four hundred years the British social system has been elaborating itself until it has become the most potent force in British life. “There has been no ‘free and equal’ nonsense about it. Great Britain has been governed by a privileged caste of aristocrats, whose morale has been high and whose purpose has been plain—to keep themselves and their country on top of the pile.”

This aristocracy has been open to birth and to wealth. You can be born to the purple, or buy it. So for generation after generation society has set the standards that others try to follow and has renewed itself from vigorous and successful men of every age ; ”The Victorian manufacturers, the merchant adventurers and Indian ‘nabobs’ of the eighteenth century, and the historians, artists, poets, scientists and authors of all generations have all seen as the reward of success the patent of nobility.”

“An aristocracy of birth, an aristocracy of wealth, and an aristocracy of brains when combined constitute a formidable society. When they follow the same standards set by the aristocracy of birth and fortified by a system of privilege, they are irresistible. In England Babbit knows that his place is at the tradesmen’s entrance rather than at the front door unless he ‘plays the game,’ whose rules are set by British society. That is the secret of British power.”

The question before this war was can England recapture her old world-wide predominance in economic affairs ? The Bank of England, that powerful organisation, under its influential Governor, Montagu Collet Norman, is one instrument now being used to work towards this end. It exemplifies the baffling fusion in England of the same interests which have led to the incompatible dualism of Wall Street and Washington in America.

Mr. Norman’s biographer has called him “the greatest statesman in Great Britain since the war.” As head of the Bank which directs the financial destinies of half the world Mr. Norman has perhaps enjoyed more power than any individual of his generation. He it was who brought the country back to the gold standard in 1925 and moved heaven and earth to keep it there. Between 1923 and 1925 the Bank of England, acting in close and informal co-operation with the Foreign Office, extended credits to a number of central banks in foreign countries and brought most of Europe on what is known as the gold exchange standard. This, by fixing the export value of goods in terms of a single stable commodity, both protected British manufacturers from competition in terms of depreciated foreign money and also assured British exporters with reliable means of payment for their wares.

In the realm of high politics, the Bank’s credits to Germany stabilised Central European conditions, prevented the mark from repeating its nose-dive of 1923 and thus sought to ward off radical upheaval, as well as reconstituting the European balance of power. Thanks to Mr. Norman’s efforts at that time the international gold standard was fully re-established and functioned smoothly from the time the franc was stabilised in 1926 until the disastrous summer of 1931.

The blending of business with diplomacy, however, led to disaster. Mr. Norman’s Central European loans may have been made for political reasons, but they were made at interest rates which accurately reflected the business risk. As it worked out, the Bank of England, not being in business for its health, borrowed money from France at 3 per cent, and reloaned it to Germany at 6 per cent. The Germans, in turn, reloaned some of this money to Austria and Hungary at still higher rates of interest. When the collapse of international wheat prices robbed the Danubian countries of their power to pay, the result was a chain of failures, which ran from Rothschild Bank in Vienna—the Credit-Anstalt—through the German “Big D” banks to the Bank of England, and when the French in their inconvenient way asked to have their money back England went off the gold standard with a bang.

Another “Wizard of Finance,” however, is to be found in Germany, Dr. Hjalmar Horace Greely Schacht, the Nazi Finance Director, the originator of the German confidence game, by which the Allies and America allowed their own cupidity to cheat themselves.

The first step in this game was the inflation of the German mark after the war. German marks were purchased by eager speculators in London, Paris, Amsterdam, Switzerland and New York long after they had become patently worthless. In this way Germany acquired foreign exchange at little or no cost to herself and thus compelled the international bankers to apply the Dawes Plan in 1924, which relieved Germany of much of the burden of reparations by providing a new racket.

This time the racket was in German industrial bonds. These were sold to foreign investors—largely American—and their proceeds eventually were used to pay German reparations. This cost the Germans nothing except interest on bonds for a while, gave the Allies their financial pound of flesh, paid commissions to the international bankers and, best of all, gave the British and American investing public a stake in Germany’s economic prosperity. When investments ran dry, the Germans borrowed short-term funds from British and American banks. Finally, the depression made this impossible, Germany stopped paying reparations and refused to pay back either long-term loans or short-term debts. The American bankers showed their true colours—bright yellow—by offering to sacrifice American investors, if only the banking loans were paid, but by this time Schacht knew he had command of the situation. By its holdings of foreign exchange and by other special controls the Reichsbank had accumulated such large stocks of raw materials that it was able to pass through the difficult winter of 1934-1935 far better than any other country.

Since then Schacht has taken advantage of every crisis Hitler has brought about to bring off barter deals; the game, however, became played out and a naked smash and grab raid was the only way Germany could keep going.

We can now understand her cries of encirclement and her desperate moves to avert the catastrophe the Nazi policy forced upon Germany by capitalist development and the greed of her rivals make inevitable.

The attempt to get capitalism to sail on an even keel after the war of 1914-18 failed. The economic problems confronting the world after the present war is over will be beyond the powers of Montagu Norman, Schacht, and Morgan of the United States.

The firm of J. P. Morgan & Co. is a group of private moneylenders, whose principal office is at 23, Wall Street, New York City, and which has important affiliations in Boston, Philadelphia, Paris and London. The Morgan firm controls (not owns) between a quarter and a third of the organised wealth of the United States, being especially powerful in rails, steel, chemicals and the heavy industries generally. It owes its existence to the opportunities for profiteering in the Civil War and attained its present world-wide importance as Fiscal Agent for the British and French Governments during the period of American “neutrality” in the last world war. “At this time the Morgan firm established the technique of using American money to ‘pay’ for British purchases of American goods, which later flowered in the lavish War Debts and the post-war American loans to the European countries. This practice is an invaluable asset to the British Government, and the relations of the Morgan firm with that Government can only be described as ‘extraordinarily intimate.’ To a very considerable extent Morgan is America and Morgan is the informal viceroy of the British Crown in its American Dominion.”

The spider of Wall Street is an episcopalian —it is easier for a camel to pass through the needle’s eye than for a Jew or a Catholic to enter the firm of J. P. Morgan.

It was the house of Morgan and its associate firms in London and Paris which was responsible for swinging large-scale international transactions during the last world war. “When foreign exchanges were dislocated and the credit of the City of New York was jeopardised by inability to meet obligations of 80 million dollars maturing in London and Paris, the city authorities appealed to Morgan, who quickly organised a bankers’ syndicate, which raised the needful. The Allied purchases of war supplies and foodstuffs were cleared through the Morgan firm as fiscal agents for France and Great Britain on decidedly profitable terms. To facilitate this activity they first established export departments headed by Edward R. Shellinius, with a staff of nearly two hundred engineers, manufacturers and experts. Two thousand five hundred million dollars’ worth of food and materials were purchased in this way, thus creating an American economic stake in Allied victory, sustained by a series of commercial credits totalling 1,550,000,000 dollars. This credit was floated through the Morgan banks, after being negotiated by a joint French and British commission.”

The ruling class of Britain may hope during the present war that Morgan will eventually swing things their way again, as he did during the last blood bath. Americans may reiterate again and again that under no circumstances will she allow herself to be involved. When the time comes for American aid to be essential to victory the United States is likely to line up with whosoever Morgan decrees she shall support. So much for democracy under capitalism.

The political victory of the British and French Governments in the present conflict can be anticipated, but the results from an economic standpoint will be barren. The world struggle for markets will not have ceased but will be intensified.

As for the future of the human race, everything depends upon the knowledge possessed by the working class. Not least in Britain, the United States and the western world. We are building better than we realise. The common ownership of the means of life, production for use and the elimination of all profit will be an economic necessity after the war if society is to advance.

Charles Lestor

Notes by the Way: Bad News in New York—Afraid That Peace Might Break Out (1939)

The Notes by the Way Column from the October 1939 issue of the Socialist Standard 

Bad News in New York—Afraid That Peace Might Break Out

The City page of the News Chronicle (September 19th, 1939) published a report from New York telling how shares slumped when it was feared that the war (and the war boom) might cease : —

WALL STREET’S WORST BREAK. 

  The worst setback since the “war boom” started was experienced by Wall Street to-day. Part of the profit-taking sales was attributed to the belief that peace proposals would be made by Germany.

   There was some recovery at the close, but the tone was weak and losses extended to 7 dollars in U.S. Steel, Bethlehem Steel, Douglas Aircraft and other “war babies.”

* * *

The Communist Party Explains It All Away

Though obviously embarrassed by the recent actions of the Russian Government, the British Communist Party continues to try to explain it all away. The general attitude adopted by that Party and by the Daily Worker is that the Russian Government will, in the long run, prove to have justified itself. In a letter to The Times, on September 12th, the Secretary of the “Russia To-day Society” argues that Russia has destroyed the Berlin—Tokyo—Rome Axis. He then adds:—

“It is not improbable that the British people will have much more for which to thank the Soviet Union before the present conflict is brought to a victorious conclusion.”

When the Russians invaded Poland the Daily Worker was in the unlucky position of having just published an assurance that it would not happen. The invasion began on Sunday, September 17th. The Daily Worker on the previous day had ridiculed the suspicious people who had forecast this. Mr. Walter Holmes, a regular contributor to the Daily Worker, had the following: —

“But, it seems, they learn nothing. Now, again, they are rushing forward with “explanations” of how Russia is going to share with Germany in a carve-up of Poland. I am content to leave the answer to the only people who can give it, viz., the Soviets, but I have no doubt about who is going to have the last laugh.”

Two days later the Daily Worker was explaining why the Russian carve-up of Poland was justified, as a “counter-blow against Nazis.”

On the earlier mystery about Russia’s simultaneous negotiations with England and France on the one hand and Germany on the other, the Manchester Guardian (August 29th) put a pertinent question, which the Communists will have difficult in answering: 

“If Russia did sign the German pact because she was dissatisfied with the progress of negotiations with Britain and France, it is curious that she never informed the military missions of this, but encouraged them to think that their efforts would shortly be crowned with success.”

All the same, it seems certain that now Germany and Russia are neighbours, both intent on dominating Eastern Europe and the Balkans, they will find each other very dangerous friends, liable to turn into enemies at any moment.

* * *

The Bishops War by War

The Bishop of London, 1915 : “We are in the midst of the greatest fight ever made in this world for honour and freedom, and—I will go further, and say—for the vital principles of the Christian religion.”—(Times Recruiting Supplement, November 3rd, 1915.)

The Bishop of Durham, 1939: “It is a crusade for the rescue of the ultimate factors of Christian civilisation, and we need the faith and fervour of Crusaders if we are to achieve victory.” —(Times, September 15th, 1939.)

* * *

The Revised View of Russia

As soon as the possibility of an Anglo-Russian pact disappeared the Press suddenly rediscovered that Russia is a dictatorship, and that Bolshevism is very like Nazism. The Times (August 31st) gave prominence to a long letter showing point by point the similarity between the two ideologies. The Daily Express (August 26th) found that Russia’s retirement had its advantage: “If war comes the issue will be clearer. The democracies will be ranged against totalitarian States. . . .”

The Manchester Guardian (August 25th) found, likewise, that “the true division was never between Fascism and Communism, but between freedom and tyranny.”

Edgar Hardcastle

Where Will It End? (2011)

From the November 2011 issue of the Socialist Standard

The Occupy movement is a sign of spreading unrest.

Just last month ago we asked in our editorial whether we were beginning to see the “red shoots” of recovery in the class struggle. At the time, the annual conference of the Trades Union Congress (TUC) had just called for joint industrial action, street protests and a campaign of civil disobedience, and the International Monetary Fund (IMF) had warned that America and Europe were facing the worst jobs crisis since the 1930s and an ‘explosion of social unrest’. We said then that there was no way of predicting with any confidence whether this expected ‘explosion’ would go off, or turn out to be a damp squib, depending, as it did and does, on what millions of people think and decide to do.

Since we wrote those words, you’d have to be a dour cynic indeed not to be heartened and encouraged by world events. Truly has it been said that there are decades when nothing happens, and weeks when decades happen. It’s hard to believe that in just one year we have seen a series of democratic uprisings across the Middle East and north Africa threaten or topple dictatorships; strikes and increasingly militant protests against austerity in Greece and across Europe; strikes, demonstrations and riots across Britain; and mass protests and occupations against anti-union legislation in Wisconsin, USA, to name just the most obvious and inspiring examples.

And then, in September of this year, the anti-consumerist magazine Adbusters and the activist group Anonymous announced an occupation of Wall Street. The bourgeoisie – along with the older, more senile, battle-weary ranks of class warriors and socialists – barely had time for the sneers to settle on their faces before the ‘anarchism as usual’ action had morphed into what some commentators are already calling the most significant populist movement of the left since the 1930s. On Wall Street, a decade happened in just a few weeks, and a small activist action exploded into an ever-growing movement that the mainstream media and ruling-class establishment eventually and reluctantly decided it could no longer ignore.

Ignoring it didn’t work, and neither did a rapid police attempt to suppress it with violence. Every attempt to silence and repress the Occupy Wall Street movement – including mass arrests and rioting cops pepper-spraying young girls – merely led to new waves of support. More and more workers from all kinds of backgrounds – nurses, sacked cleaners, doctors, serving and former soldiers, unemployed graduates, poor youth from the city’s most impoverished districts, even sympathetic Wall Street traders – have poured into New York’s financial district to see what’s happening, listen to talks, take part in democratically organised general assemblies to plan actions and decide upon demands (if any), and generally build solidarity, communication, and mutual aid. (For informative news reports, see the Democracy Now channel at www.democracynow.org.) The example in Wall Street soon spread throughout the country, and there are now copycat occupations in Boston, San Francisco, Los Angeles, Wisconsin, and many others, and attempts to repeat the success are spreading around the world, soon to arrive in London and the rest of Britain.     

With what result? Well, of course, no one but fake Cassandras and Nostradamuses know. It may be that the whole thing will have fizzled out before this journal hits your doorstep. Or perhaps the movement will turn lamely reformist and be bought off. Perhaps, like the civil rights movement, it will prove not at all lame, even if reformist, and win some essential gains for our class. Or perhaps even, if some of the more radical demands and ideas put up on the Occupy movement’s websites become reality, we will see a genuine anti-capitalist movement develop worldwide. These are exciting times.

The key, of course, will be whether the protest movement can involve the rest of the working class and organise to take democratic control of the whole of social life, including winning control of  the powers of government. With the potential for the Occupy movement spreading to this country and a nationwide day of action, including strikes, on 30 November, organised by the TUC, these are days of precious opportunity for the working class in Britain. It’s time, as the poet Shelley once put it, to rise like lions after slumber, in unvanquishable number. We have a life to win.

Stuart Watkins

50 Years Ago: Wall Street slump (2012)

The 50 Years Ago column from the July 2012 issue of the Socialist Standard

Wall Street got the twitch last month and so did London and the Bourses on the Continent. The newspapers rushed out pictures of the panic in 1929 and then had to set their City Editors to work to explain why 1929 cannot after all happen again.

Everybody seemed to have forgotten that just before 1929 the financial experts were assuring us that the crash which was in fact just around the corner could never happen anyway. If this does not make the experts of 1929 look very impressive in retrospect, it must also teach us that the forecasts of all capitalism’s economic experts are not worth very much.

Nowadays the experts are fond of pointing out the precautions which (they are confident) would prevent a runaway boom like the one which preceded the 1929 crash and therefore (they reason) would also prevent the crash itself.

This ignores the fact that slumps are not the result of an attack of jitters on the Stock Exchange; rather is it the other way round. Nineteen-twenty-nine was one of capitalism’s classic crises and no amount of stock juggling could have averted it.

Nor should we assume that hotheaded speculation is dead. The Observer correspondent in New York reported that the "intellectuals” of Wall Street thought that: "By the end of last year the market had reached heights that brokers now, without blushing, describe as insane.” and quoted one New York broker: “The way some of (the big brokers) have been pushing over-priced stocks at naive investors is nothing short of criminal.”

Perhaps a repeat of 1929 is not so impossible after all. For some of the experts were mystified by Wall Street’s 1962 twitch. The Guardian said: “The continuing retreat is puzzling commentators in that there seems to be no apparent reason for it. Mr. Walter Heller, President Kennedy’s economic adviser, said there were no economic grounds for the condition of the market.” Does this fill us with confidence that capitalism’s economists could not be taken unawares by a repeat of 1929? It does not.

Capitalism could have something up its sleeve, just as it had thirty-three years ago, to surprise the experts and impoverish the rest of us.

(From “The News in Review”, Socialist Standard, July 1962)

Fear, Hate and Greed (2014)

From the December 2014 issue of the Socialist Standard

Capitalism is riddled with fear. Fear of its ever present wars. Fear of crime and criminals. Fear of being alone. Fear of being consumed by personal debt. The divisive fear of immigrants. And the fear common to all who are compelled to work for wages – the fear of unemployment.

Fear and hate are frequent bedfellows and Josef Goebbels, the master of Nazi state propaganda, knew exactly where to exploit those emotions when he affirmed: ‘Think of the press as a great keyboard on which the government can play’. Where state benefits are concerned the media has peddled hate to the fearful – pounding the keyboard with glee. Cutting back on benefits when capitalism is in crisis is nothing new. During capitalism’s last depression those workers who had paid into the scheme received the dole for 15 weeks. The National Government, another coalition, cut the benefits of those on the scheme who were unemployed by 10 percent leaving them to rot alongside the other millions relying on poor law relief. In August of 1931 means testing the unemployed was implemented. Underpinning the poor laws and its sibling, the dole, are the deeply entrenched ruling class ideas of making claiming benefits so, ‘unpleasant that, people would not claim it, stigmatising relief so that it became an object of wholesome horror’ (wikipedia.org). Governments, whether claiming to be left, right or centre have been cutting benefits since the post-war boom of the 1970’s ended. And the reason why? Because they are a charge on profits, and thus detrimental to the real orchestrators of the tune and the owners of the keyboard – the capitalist class.

Handouts and handouts

The words benefits and scrounger have become conjoined. Goebbels would have been proud of the media hacks who have slavishly followed his guidelines: ‘The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly – it must confine itself to a few points and repeat them over and over’. Thus the fearful have been given their slogan and its corollary is revealed in, ‘a YouGov survey which shows: Up to 212,000 have been physically attacked because they’re on benefits’ (mirror.co.uk, 8 September).

Benefits, dole, and handouts are what is made available to the unemployed, and those surviving on low wages. Subsidies, funding and support are invested by the state in corporations. A report written for the TUC entitled ‘The Great Train Robbery’ showed, amongst other things, that the, ‘train operating companies are entirely reliant upon public subsidies to run services. The top five recipients alone received almost £3bn in taxpayer support between 2007 and 2011. This allowed them to make operating profits of £504m – over 90 per cent (£466m) of which was paid to shareholders’ (tuc.org.uk, 5 June 2013). Publicfinance.co.uk can report that the total government subsidy to the railway businesses now stands at £4bn per year (16 April). With just a small slice of the subsidy benefitting ‘a top executive from Network Rail who will become head of construction. . . on an annual salary of £750,000, making him one of the country’s best paid public servants’ (ft.com, 17 January).

‘The private finance initiative (PFI) is a way of creating public–private partnerships (PPPs) by funding public infrastructure projects with private capital’ (wikipedia.org). Benefitting from this is a clique of banks, builders and service providers who build, and sometimes run, schools, hospitals and related public projects. And the benefits to the clique: state payouts over a 20 or 30 year period. However, ‘PFI has been controversial in the UK; though the National Audit Office felt in 2003 that it provided good value for money overall’ (wikipedia.org). Not so thought the disenchanted Treasury Secretary Vince Cable six years later: ‘The whole thing has become terrible, opaque and dishonest and it’s a way of hiding obligations. . . PFI has now largely broken down and we are in the ludicrous situation where the government is having to provide the funds for the private finance initiative’ (bbc.co.uk, 3 March). And the funds continue to flow to those that benefit: ‘As of 2013, it was forecast that 725 PFI contracts for public facilities across the UK, with a total capital value of £54bn, will cost the Exchequer more than £300bn by the time they are paid off’ (newstatesman.com, 20 February).

Mindfulmoney.co.uk’s headline asked the question, ‘What is the cost to the UK taxpayer of supporting our banks’? It answered itself by referring to The National Audit Office’s estimate: ‘it peaked according to the NAO at £1.162 trillion’ (17 July, 2013). Support? Obviously, this isn’t the same as Income Support, which currently is awarded, after means testing, to a couple aged over 18 at £113.70p per week. Some commentators are more impolite and call it a bail-out. One of the main beneficiaries in the UK was the Royal Bank of Scotland which is labelled by the media as ‘our bank’. ‘We’ own 82 per cent of it after the state invested £37 billion of its funds in October 2008. But, dear oh dear, ‘our’ investment has lost a few quid even after more funds were invested. That scourge of the benefits scroungers The Daily Mail could run the headline, ‘RBS has lost all the £46bn pumped in by the taxpayer’. The editor got out his calculator to let his fretful readers know that, ‘In total, the lender has since paid out £4.6 billion in bonuses – £1 billion for every £10 billion it has lost’. Also included in the £46 billion was, ‘a £3.8bn bill for customer mis-selling’ (27 February). Note the word bill. That couldn’t be a fine like those slapped on a benefit scrounger and imposed by the state law courts could it?

Swindlers and swindlers

Such as the case against, ‘ a mother of three who was jailed for five months for swindling more than £70,000 in benefits… DWP Minister Lord Freud said: In addition to the sentence imposed by the court, the department always seeks to recover the benefits falsely obtained, to ensure that fraudsters do not benefit financially from their criminal activities’ (Bristol Post, 6 June 2011). Or a man who gained notoriety via the BBC news site for ‘falsely claiming £28,332 in disability benefits. . . Judge Recorder Richard Booth said the offences were disgraceful and so serious that a prison sentence was necessary (3 November). Or, ‘a man who stole to eat after his benefits were stopped. . . admitting stealing three packets of casserole steak. . . after changes to his benefits left him hungry. . . he pleaded guilty to stealing the food, worth £12.60, and was sentenced to six weeks in prison (The Northern Echo, 22 October).

RT.com on the 28 October reported on a speech by the BoE Deputy Governor, Nemet Minouche Shafik who, ‘denounced the actions of UK traders in foreign exchange, currencies and bonds markets, warning financial misconduct in these sectors goes well beyond a few rogue financiers. . . the BoE’s deputy governor said the tired argument that financial misconduct relates to the behaviour of a ‘few bad apples’ is no longer credible. Shafik suggested UK financial regulation lacks efficacy and robustness, and a regulatory overhaul is needed to fix the barrel and to get rid of the bad apples’. This statement acts as a sop to a very long list of so-called financial misconducts amongst an elite that has made the news, albeit unsensationally, since 2008. Misconduct such as the extremely beneficial practice amongst banks of mortgage selling about which Dean Baker, economist and director of the Centre for Economic & Policy Research said, ‘Knowingly packaging and selling fraudulent mortgages is fraud. It is a serious crime that could be punished by years in jail’ – However – ‘No senior bank executive has faced criminal charges following the mortgage crisis’. William D. Cohan, a former senior mergers and acquisitions banker, wrote in the New York Times that ‘not only has the government barely punished those on the hook for Wall Street crimes, the Justice Department has also offered ‘sanitized’ versions of events that led up to the crimes in its accounts given to the public following investigations (rt.com, 22 August). So Nemet, looks like there might be a few barriers in place when it comes to fixing the barrel. Or maybe that’s just on Wall Street?

It’s easy under capitalism, given all of its contradictions, to see the whole thing as some sort of lunatic asylum. But a better comparison is a prison run by the most proficient thieves. The media is utilised like the pickpocket that directs your attention elsewhere whilst another robs you. One of the things that is stolen is your capacity to think like a human being. Fear, hate and greed permeate the prison walls. But the prison isn’t escape-proof. All it takes to get out is to decide that is what you want to do, and join with others working to bring down the prison walls.

Andy Matthews

Beyond protest (2016)

Book Review from the November 2016 issue of the Socialist Standard

‘The End of Protest. A New Playbook for Revolution’. By Micah White. Alfred A Knopf. Canada. 2016.

Micah White says he was one of those who thought up the idea of occupying Wall Street in September 2011. His proposed aim for this was to demand that Big Money be taken out of American politics, but the Occupiers’ demands soon went beyond this. According to him, he and others really believed that the occupation could topple Wall Street in the same way that demonstrations and occupations earlier in the year had toppled dictatorships in Tunisia and Egypt. This book is his explanation of why this didn’t happen, why it was never likely to, and why capitalism is not going to be overthrown in this way. Hence ‘the end of protest’, or at least of this kind of protest with this aim.

We could have told him that minority direct action of this sort is not the way to overthrow capitalism – as he himself points out, the state has the power and the majority-backed (even if manipulated) legitimacy to deal with such protests – but it is good to see someone who once believed this to be the way come to realise that it isn’t.

So what is he now advocating? On the surface, something surprisingly similar to how we have envisaged revolution. He calls for a ‘leaderless world revolution’ in which, among other things, a ‘World Party’ will win political power in one country ‘sparking an electoral insurrection in one place after another’, meaning ‘the electoral social movement would hop around the world from victory to victory’. The people, he says, ‘must capture legislative and executive control constitutionally and legitimately’ because this will assure mainstream support for the revolution. He compares his change of mind to Engels changing his about barricades and also advocating elections in place of an out-dated tactic.

That’s as far as it goes as White envisages that the ‘electoral social movement’ should start by aiming to win control of ‘sparsely populated towns and cities’, declaring them liberated and running them without leaders. He himself is practising what he preaches, standing for mayor of Nehalem (population 291) in this month’s US elections (we can report next month how he fared). He does not say on what platform he thinks elections should be contested. Since he still believes that a conscious minority can express ‘the people’s will’ independently of what a majority of people at one time might think or want, it could well be something other than a full revolutionary programme, just democratic reforms.

He has also gone mystical. At college he provocatively formed an atheist society but he now looks to divine or supernatural intervention to play a part in the revolution. This could lead to his other views not being taken seriously.

Adam Buick

Election result

In our review of Micah White’s book The End of Protest: A New Playbook for Revolution we said we would say how he did in his bid to become mayor of Nehalem in rural Oregon in the election there in November. He got 36 votes (20%). The election was won by his Republican Party rival with 138 votes)

The Kings of Capital and the Captains of Industry. (1929)

From the January 1929 issue of the Socialist Standard

Once again America’s rapid economic march illustrates the truth of the Socialist case. Twenty years ago we had occasion to point the lesson of the struggle between the Titans—Andrew Carnegie and Pierpoint Morgan. That was a conflict between two powers representing two factors in economic life. Not two individuals having a wrestling match, not a personal struggle between two great minds; but a dramatic and mighty clash between two social forces—one waning and outstripped by the economic advance, the other triumphant and in harmony with the economic trend. Carnegie’s personal knowledge of the steel industry and his life-work in personal conduct of the steel business—this could not withstand the influence of mere moneyed men, Morgan and his banking colleagues of Wall Street; men who knew not the making of steel, but who controlled vast financial resources. And so Andrew Carnegie’s Pittsburgh and other huge foundries became part of the United States Steel Corporation. Morgan won because those who controlled finance were able to buy and buy out those who knew the industry, but whose capital was smaller.

And that lesson illuminated industrial history since that day. The silent but sweeping changes in social life saw the passing of famous firms and famous names who had been absorbed by the huge financial combines. Men who boasted how much personal interest they took in the control of their business were pushed aside, crushed or swallowed up by the men who had a finger in hundreds or thousands of different businesses and who took no personal interest in manufacture. It was the day of the Big Banks, the Finance Company, the Debenture Loan or Stock, the Mortgage Bond and other strangleholds of finance that took charge of the title deeds of “the man of property and the men of industry.”

Then upon the scene emerges the ideal of all anti-Socialist arguments—the Man of Invention appears—Henry Ford. Henry Ford was a pioneer in the industry with a small workshop actually engaged in the manufacture of motor engines. The suitability of the cheap motor to the times gave a rapid and continuous fillip to Ford’s business. By using the inventions of many others and gathering round him the picked and trained brains of the workers to superintend and run the industry, Fords became the largest motor business in the world. .

Personal control and personal supervision played a good part in the early days of the business, but the time arrived in economic competition when mere personal control, brains and knowledge of an actual industry, no longer decided who was victor in the world of industry. The bankers of Wall Street, led by Morgan, heavily financed Ford’s competitors, who were able to produce a cheap car which sold quicker than Fords. Henry Ford closed down for nearly a year in 1927, while the whole factory was overhauled and new machinery installed to get out an improved car that would once more capture the market. The 1928 Ford car came and was heralded as the wonder of autos, but the power of finance in the modern world was hardly reckoned with. The great competitor of Ford was no personally conducted firm with personal savings behind it, but the General Motors Corporation, backed by the leading financiers of America—a combine which had absorbed dozens of motor companies and other firms making all the parts and trimmings of the modern car. Ford’s great asset—the use of the most modern machinery, each doing one small part and that only—this was duplicated and triplicated by the combine which had more finance than Ford. So the General Motors Co. at Detroit, Flint, and many other “plants,” completely re-planned their machine industry and laid down the best and most efficient machines with the latest speeding-up methods.

Henry Ford—God of the Individualists, Apostle of Competition, Father of the Gospel of Personal Service—finds his firm to-day losing ground heavily. The great concern opposing him—owned by men who know not engines, but who have finance and can hire the trained workers who do know engines—this General Motors Co. are able to say that their Chevrolet Car—the one put out to smash the Ford—sold 84,503 in July, against 43,094 Fords. 

Where will it end and what does it portend? The story of Morgan and Carnegie looks like being repeated. King Capital is no respecter of persons—Grow or bust, is his dictum! 

And so the firm of Ford looks like eventually being driven to combine with the large financial trust or go under. The workers will go on making cars and the bondholders will continue to reap the profits. Their employers will read stock exchange lists and thus get their knowledge of the industry. Henry Ford and his type will be shareholders in the concern which can do better by hiring hungry workers than by waiting for the working pioneer to get fresh ideas.

There is the lesson—ownership of wealth and more wealth is the winning card.

Finance buys up the personally-conducted businesses and becomes the ruler of more and more workers.

Shall the octopus grow or will the men and women who do the actual work in business and industry learn that they can run society without the parasite—financial or industrial?

Adolph Kohn

Editorial: The Ghost Walks Again (1962)

Editorial from the July 1962 issue of the Socialist Standard

Our capitalists have seen a ghost, a ghost they had thought banished for ever, the ghost of 1929. It showed itself only for a moment, just long enough to revive terrible memories and turn optimism and complacency into fear and uncertainty.

The Chairman of the London Stock Exchange, with true British stolidity, denied that there was anything like panic. But the Americans have not been nearly so reticent and are quite ready to admit that at one stage on that horrible Monday only a hairsbreadth separated them from panic. Not for years were there such scenes on Wall Street, the ticker tape falling behind by 34 minutes at one point with prices dropping catastrophically. Although according to a correspondent of the Economist there was a wider price swing in 1955 when President Eisenhower had his heart attack, never since 1933 had so many small investors tried to get out of the market all at once.

The economic experts, so-called, have naturally been hard at work telling us all about it. The hacks were in right away discounting fears that it might be another 1929 and doing their best to keep up flagging spirits. Some of them were even describing the next day’s partial recovery as a boom. More sober assessments were being made by the end of the week, though they did not add much more to our knowledge than the wilder fancies earlier. Some blamed the crash on the small investor, others on President Kennedy’s recent harsh line with the U.S. steel companies, others comforted themselves with the thought that it had given a much needed shake-out to the market and that things would be healthier for it. But, even more than usual, none of them seemed willing or anxious to commit reputations to anything more than vague speculation.

It is, of course, the easiest thing in the world to read too much into stock market fluctuations. A fall in share prices, even a violent one, is in itself no indicator of a slump. The 1929 depression is superficially remembered by the Wall Street crash, but it was not caused by this. The crash was only the dramatic culmination of complicated economic forces that had been working themselves out for some time before. Thus the recent events on the world’s stock exchanges do not add up to a slump nor do they indicate necessarily that one is on the way. They are essentially the reflection of the present economic state of world Capitalism, in particular of American Capitalism.

After seventeen years of comparative prosperity, brought about largely by the need to make good the destruction of war and by the huge expenditure on preparations for another, the momentum is now slowing down. Goods are getting harder to sell, profit margins are having to be cut, and many industries are working well below capacity. The confident assumption that things were automatically going to get better was in fact already being questioned before the recent big break. It should not be forgotten that there had been a similar severe fall on Wall Street only a few weeks before and that the share price index had been dropping steadily for some months before then. It is against this background that we must look for the significance of the crash

Although basically reflecting the economic forces of Capitalism, the stock exchanges can, of course, react upon those forces in turn. It is almost certain, for example, that the recent shock has put paid to the belief of the Capitalists that prosperity was going to go on and on. On the other hand, it could just as easily convince them that things are actually going to get worse and thus help tilt the downward trend into a real slump.

The really interesting thing is to see the reactions of the Capitalist class and their advisers to the crash. In spite of all the talk about how Capitalism can be controlled, about how much has been learned about its workings since 1929, about Keynesian planning and the rest of it, they have been really shocked and frightened. They have seen a ghost they thought they had theorised into disappearing.

And they are not at all sure that their theories will be enough to prevent it coming back again.

Wall Street (1988)

Film Review from the August 1988 issue of the Socialist Standard

For once a film that has been a box office success is worth going to see. Wall Street is a thoroughly believable portrait of the world of the New York stock market. It has excellent acting performances by Michael Douglas as the ruthless corrupt tycoon Gordon Gecko and by Charlie Sheen as Gecko's young conscience-ridden apprentice. Both have slick but convincing dialogue to deliver and scenes which, while having loads of technical detail about financial dealings that go right over your head, are so tightly held together as to keep you riveted for the whole two hours.

The film has social messages too. And what better way to deliver them than to make them part of a powerful human drama? The director, Oliver Stone, has already shown his moral and political concerns with films like Salvador and the recent one about the Vietnam war, Platoon. Wall Street, it has been said, is a condemnation of the capitalist ethic, of the institutionalised greed the market system represents. In one key scene in the film, Gecko addresses a hall full of shareholders and, making no apology for his ruthless dealings, says of the market:

"Greed is right. Greed is good. Greed clarifies." Of course, coming from the mouth of an absolute stinker, this is a speech whose message to the filmgoer can only be the reverse of what was intended.

But does the filmgoer actually leave the cinema thinking the market is bad? Well, yes and no. In the end the apprentice escapes the clutches of his sorcerer and helps deliver him to justice. But the justice he delivers him is a law that classifies as illegal some of the dealings Gecko has been involved in, so-called "insider dealings". So, from this point of view, profit-making through the market is seen as fine as long as it takes place within the rules laid down by the profit-making system. Yet, at the same time, in its representation of the way in which the millions of people who run society are powerless pawns of the market and can see their livelihoods and futures upset by it at any time, Wall Street will set many people thinking that there must surely be a better, saner way of organising the way we live and produce. The film itself doesn't go so far as to suggest one, but then if it had it would probably have been more didactic, less watchable, and no doubt less of a box-office success.

Howard Moss

Not disillusioned enough (2010)

From the November 2010 issue of the Socialist Standard

It is good that so many of Obama’s followers are disillusioned. But they are not half as disillusioned as they need to be.

The once fervent supporters of Barack Obama say that they are more and more “disillusioned” with his politics. And the word should be apt since so many of them were intoxicated by the illusion that one single politician could transform a rotten social system. It seems, though, that many of those who describe themselves as disillusioned are accusing Obama of breaking his promises, rather than blaming themselves for falling prey to a naïve illusion.
This seems a bit unfair to Obama, who made no secret during his campaign of his “moderate” political outlook. A central theme of his campaign, in fact, was the need for bipartisanism to counter the trend towards politics becoming too “ideological”. Those who now criticize Obama for being yet another spineless Democrat were not paying adequate attention to the statements he made during the campaign. Obama made no secret two years ago of his deeply-held principle of never sticking to any principle. He has never claimed to be anything but a “pragmatist”, which is a nicer way of saying “opportunist”.

There was, of course, that promise Obama made about bringing about some sort of change, but isn’t it a bit unfair to hold him to such a sweeping and vague promise? And things have changed – just not for the better. Over the past two years, millions of Americans have experienced the dramatic change of losing their job or home (or both).

Principled spinelessness
Those painful, negative changes might be easier for some to stomach if Obama had cracked down on Wall Street or ended the senseless wars in the Middle East. But instead he has left many Bush Administration policies intact; and even the few important policy changes that Obama has implemented have been tainted with his “principled spinelessness” (most notably, his healthcare reform that leaves the parasitic insurance companies in place and even presents them with opportunities for expansion).Yet here again Obama has more or less been true to the positions he held prior to the presidential election. Even if we go back a bit further, to his book The Audacity of Hope, published in 2006, we see that he proudly displayed his essentially “conservative” politics. Far from making promises to leftwing Democrats or posing as a progressive, Obama was careful to define himself as a political pragmatist, ready and willing to work with the Republicans.
Moreover, one of Obama’s traits, as the book reveals, is a concern to not be caught in outright lies. He rarely resorts to statements that directly invert the truth in the style of Bush’s “We don’t torture” or Nixon’s “I am not a crook.” Rather, Obama likes to underscore the complexity of reality and the need for pragmatic solutions.

Wishful thinking
The idea that President Obama has broken his promises can only seem valid to those who – against all the evidence he provided – fashioned an image of him as the country’s progressive saviour. These are the people who helped make The Audacity of Hope a bestseller, but one can’t help wondering if they got past the first few pages. Anyone who managed to at least read the prologue would have encountered the following passage, which might have given them pause for thought:

“I am new enough on the national political scene that I serve as a blank screen on which people of vastly different political stripes project their own views. As such, I am bound to disappoint some, if not all, of them.”

Had his readers reflected a bit on this insight, they might have questioned whether the “Obama as saviour” storyline was not simply a case of wishful thinking. But perhaps that is like asking someone in love to consider the possibility that the object of their love is not quite perfect.

Obama’s warning in the prologue might be easy to overlook, but it is followed by countless examples throughout the book where he lays out quite clearly his conservative credentials and deep-rooted affection for the capitalist system, including a prominent passage in that same prologue where he informs the reader that (contrary to what those at Fox News might have believed) not an ounce of “socialism” will be found in the subsequent pages:

“I believe in the free market, competition, and entrepreneurship, and think no small number of government programs don’t work as advertised…I think America has more often been a force for good than for ill in the world; I carry few illusions about our enemies, and revere the courage and competence of our military…I think much of what ails the inner city involves a breakdown in culture that will not be cured by money alone, and that our values and spiritual life matter at least as much as our GDP.”

Obama “thinks” a lot of things in the book, and surprisingly few of his thoughts are in harmony with the views of his leftwing supporters, who worked so hard to get him elected.

Boots on the ground
Take his views on foreign policy, for example. This is an area where the views of the “anti-war” candidate Obama were thought to differ sharply from the hawkish approach of Hillary Clinton (now his Secretary of State!), not to mention the belligerent policies of Bush and McCain. In fact, Obama made it perfectly clear in The Audacity of Hope that he would deploy US troops when necessary, because “like it or not, if we want to make American more secure, we are going to have to help make the world more secure”. Rather than rejecting Bush’s absurd and counter-productive “war on terrorism”, Obama wrote that “the challenge will involve putting boots on the ground in ungoverned hostile regions where terrorists thrive”. And lest the reader imagine that such military force would only be used in retaliation, Obama claims that “we have the right to take unilateral military action to eliminate an imminent threat to our security”. It is something of a mystery how Obama managed to convince so many that he was a foreign policy “dove” while at the same time publishing such views.
But the surprising gap between what Obama himself pledged to do and the sort of president many of his supporters hoped he would become is not limited to the realm of foreign policy. For domestic policies as well, the real Obama has turned out to bear almost no resemblance to the second coming of FDR that more than a few had predicted or expected. At this point, I suspect, many “disillusioned” Democrats would be satisfied with a pale imitation of LBJ.

Yet how can Obama be blamed for those false expectations? In his book, even while recognizing that FDR “saved capitalism from itself” through his New Deal reforms, Obama does not fundamentally criticize Reagan for setting about dismantling aspects of the welfare system. He even says that there is a “good deal of truth” in “Reagan’s central insight – that the liberal welfare state had grown complacent and overly bureaucratic”. And Obama, not surprisingly, praises Clinton, who “put a progressive slant on some of Reagan’s goals,” for achieving “some equilibrium” by creating a “smaller government, but one that retained the social safety net FDR had first put into place”.

Hardly the stuff of “socialism”
Obama is not so forthright in explaining his own welfare policies, but he implies that welfare should be a bare minimum. We should be “guided throughout,” he writes, “by Lincoln’s simple maxim: that we will do collectively, through our government, only those things that we cannot do as well or at all individually and private,” leading to “a dynamic free market and widespread economic security, entrepreneurial innovation and upward mobility.” This is hardly the stuff of “socialism” – or even of West European social democracy.

But there were many, even self-described socialists, who thought that Obama, whatever his statements during the campaign, would be compelled by the economic crisis itself or a growing working class movement, to enact policies similar to the New Deal of the 1930s. This expectation allowed such leftists to adopt the stance of backing Obama in the election without explicitly supporting his politics – adopting the posture of “critical support” of which they are so fond. (I can’t help wondering, though, why such “socialists” can’t set a goal higher than once again “saving capitalism from itself”.)

Yet in the midst of the continuing Great Recession, Obama has not budged from his belief that the solutions to the problems plaguing the United States can be found lying in the middle of the political road, so to speak, just waiting to be picked up. This is the belief he wrote about back in 2006, and his policies in office have been based on it.

An anti-Bush without Bush
Still, it was understandable that so many were drawn to Obama, despite his relative honesty regarding his own conservatism. Millions were sick to their guts of Bush and the Republicans and it was indeed “time for a change”. The cautious, compromising attitude of Obama could even appear principled compared to the reckless pigheadedness of Bush. The charisma of Obama was based on his self-presentation as the anti-Bush. Clearly, Obama appeared at the opportune time, when much of the population was desperate to believe that the country could change for the better, after eight long years when everything Bush touched turned to shit. This was the basis for the foolish – or “audacious” – hope that Obama could, almost single-handedly, set things right.

Obama’s once overpowering charisma has faded away, however. Now that few can remember exactly what it felt like to loathe the neocons, he no longer glows in the reflected light of the burning rage against Bush. Obama without Bush is a far less compelling act – like a “straightman” in a comedy duo who decides to go solo.

So people went from the naïve view that Bush is the root of all evil to the equally simplistic idea that Obama could uproot that evil. And now we have a sense of disillusionment due to the persistence of deep-rooted problems despite the election of Obama. Yet the idea that Obama has betrayed us is based on the initial illusion that he could rescue us from problems that are deeply rooted in capitalism itself. This notion, in turn, is no different from the superficial idea that those problems arose from Bush’s stupidity or mendacity. It is pointless to transform Obama from a saviour into a new scapegoat.

It is good that so many of Obama’s followers are disillusioned. But they are not half as disillusioned as they need to be! Only when millions of people finally give up the illusion that capitalism can be fundamentally reformed to somehow create a more humane world will we be on the road to real social change.

Michael Schauerte