Answers to correspondents: Abolition of Capital ? (1939)

Letter to the Editors from the July 1939 issue of the Socialist Standard

Mr. D’Arcy Denny (Biggin Hill)

We have your letter asking us to explain what we mean by the phrase, “Abolition of Capital,” which, you say, appeared on page 35 of the Socialist Standard, dated November, 1933. On referring to the page in question we find that what we said was, “Abolition of Capitalism.” Under Socialism goods will be produced only for use. There will be no monetary system, and no capital.

Editorial Committee.

A Look Round. (1907)

From the January 1907 issue of the Socialist Standard

On January 1st all orthodox persons are supposed to make resolutions—which they devote the remaining days of the year to breaking. Reformers of all shades are amongst the orthodox, regarding the members of the S.P.G.B. as unorthodox, “visionary,” “outside the political pale,” etc. I would suggest that these folk take a resolution to ignore the things that do not matter, and to devote their energies to the only thing that does, viz., the class ownership of the means of wealth production, and the consequent enslavement and poverty of the wealth producers,

o o o

If the reformers could show any effective “reforms” as the result of their efforts ; if they could prove that any “reforms” they may have been instrumental in securing have made any real difference to the condition of the working class, one would be inclined to bear with them, but when there is abundant testimony to the failure of their efforts, to the waste of all the money they have spent, the time and energy they have devoted to the particular phases of the social problem which find favour in their eyes, one gets a little impatient. However, I will be calm and will only bid them take to heart the truth, as expounded in the following paragraph, extracted from the columns of that, most respectable organ, The Times, of Christmas Day, in its comments upon the reports by medical inspectors of the Local Government Boards.

o o o

“The stories told, it says, are monotonous, and, in most instances, the particulars are disgusting. . . Houses unfit for human habitation, rooms destitute of light and ventilation, overcrowding in rural cottages, contaminated water supplies, accumulations of every description of filth and refuse, a total absence of drainage, a reign of unbelievable dirt in milk-shops and slaughter-houses, and an inadequate supervision by officials who are frequently incompetent; such, in a general way, is the picture that is commonly presented.”

o o o

Reading an article from the pen of Mr. E. Belfort Bax in Wilshire’s Magazine, written from the National Liberal Club, England, a correspondent in America asks how the S.D.F. can square its assertion that the Liberal Party must be smashed with the fact that it allows its prominent members to belong to Liberal Clubs. We know it is usual to ask riddles at the festive season, but, owing to the ravages of the prevailing epidemic, we regret we are not up to finding the solution.

o o o

According to the Reader, one of the most prized possessions of Lord Tweedmouth is a half-crown. It is set in a frame, and underneath are the words, “Honestly earned.” We congratulate his Lordship upon being so candid as to admit that out of his large income he has only “honestly earned” one solitary half-crown in his life, and that was by accident.

o o o

Mr. Ben Cooper (Liberal) and Mr. Harry Quelch (S.D.F., and supporter of Liberal candidates) will represent the London Trades Council at the Labour Party Conference at Belfast this month.

o o o

Mr. Bell, M.P., addressing a meeting of the Derby Trades Council recently, said that he certainly had said “For God’s sake let us keep politics out of our unions,” and he was still of the same opinion. Later he declared that they had had more advantages for Labour during the past year from the Liberals than they had ever had or were likely to have from any Conservative government. His position was and always had been one of strict neutrality, but he invited them to give the Liberal Government credit.

o o o

If Mr. Bell believes in keeping politics out of the unions, why does he so continuously use union meetings to boom the Liberals and—Richard Bell, M.P. ?

o o o

In these days when wealthy and titled personages are entering the “Labour” movement, and, because of their wealth and their titles, being pushed to the front by the middle-class dominators of that movement; when “Labour ” “copy” is “good copy” in capitalist journals and magazines, the working class will need all their wits to prevent side-tracking. There is something to ponder over in the words put into the mouth of an Anarchist plotter in a story in the December Harper’s.

o o o

“Don’t you know yet that an idle and selfish class loves to see mischief being made, even if it is made at its own expense ? Its own life being all a matter of vestment and gesture, it is unable to realise the power and danger of real ache and of words that have no sham meaning. It is all fun and sentiment. It is sufficient, for instance, to point out the attitude of the old French aristocracy towards the philosophers whose words were preparing the Great Revolution. Even in England, where you have some common sense, a demagogue has only to shout loud enough and long enough to find some backing in the very class he is shouting at. You too like to see mischief being made. The demagogue gets the amateurs of emotion with him. Amateurism in this, that and the other thing is a delightfully easy way of killing time, and of feeding one’s own vanity—the silly vanity of being abreast with the ideas of the day after tomorrow. Just as good and otherwise harmless people will join you in ecstacies over your collection of old china, without having the slightest notion in what its marvellousness really consists.”

o o o

With the advent of these “aristocratic” and “millionaire” Socialists in increasing numbers, more strenuous efforts are made by their “fellow conspirators” to make Socialism appeal ever so respectable. “Hide the Red Flag” says one section; “Don’t hold meetings on Sundays,” says another; “Deny the Class War,” and so on. And here is Gaylord Wilshire, one of America’s “millionaire Socialists,” repeating the old twaddle that “The phrase ‘capital versus labour’ continually gives rise to the popular misconception that labour is against capital, or rather that the Socialist is against capital. Not at all. The Socialist is against the private ownership of capital, but certainly not against capital itself.”

o o o

The Socialist who understands the position is out for the abolition of capital. This was dealt with in our issues of April and August last.

o o o

“There are many Socialists who assert that ‘the armed nation,’ so called, should supplant the standing armies of capitalism, but the experience of Switzerland doesn’t bear out the theory. A recent meeting of Socialists in the Canton of Zurich was held to protest against the employment of troops in suppressing strikes. They claimed that in no country in Europe, Russia not excepted, were troops so constantly used to put down strikes and suppress picketing, and stated that ‘military outrages against peaceful strikers are becoming matters of daily occurrence.’ Switzerland’s military establishment is based on the ‘armed nation’ principle.” 

Wilshire’s Magazine.

o o o

In the Report of Mr. D. Cummings and his Executive of the Boiler Makers’ Union, on the failure of the Clyde Strike, and the defeat of the men, occur these words : “On account of our railway shares not being saleable without great loss, and the difficulty of disposing of the Preference shares of Armstrong, Whitworth, and Co., we were momentarily in financial difficulty, but our bankers advanced us temporarily a large sum of money at the current interest, and were prepared to advance us still more had the strike gone on.”

o o o

The capitalist Press are continually booming the “thrift” of the working class, as evidenced by their savings in trade unions, friendly societies, building societies and the like. But in a time of need, such as the strike under review, these savings are useless unless “at call.” As they are invariably invested in capitalist enterprises they are, not available when needed, except under the disadvantageous circumstances referred to in the Report. A combination of financiers could at any time, paralyze the trade unions, by dealing with their investments on the Stock Exchange in such a manner as to render them useless.

o o o

The capitalist cat has at least the proverbial number of lives, and is not going to be killed by a little Trade Dispute Act, despite the junketing of S.D.F., I.L.P., and Liberal-Labour men, who forgot their differences and ate, drank, and were merry together at the Shackleton Banquet last month.

J. Kay

Blogger's Note:

"There is something to ponder over in the words put into the mouth of an Anarchist plotter in a story in the December Harper’s . . . " 

The passage quoted from Harper's magazine is from Joseph Conrad's short story, 'The Informer'. I'm guessing this short story was one of Conrad's dry runs for his more famous work, The Secret Agent.

Cooking the Books: What does ‘capitalism’ mean? (2024)

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

Last month the BBC released a podcast of Laurie Taylor discussing capitalism with two authors of books on the subject.

The first was Michael Sonenscher, author of Capitalism, The Story Behind the Word (reviewed in the January 2023 Socialist Standard). He told Taylor that the word originated in the 18th century (in France as capitalisme) to refer to the practice of governments borrowing money-capital to finance their activities. Capitalism was the name of this practice and those who lent governments the money were capitalists. He contrasted this with what he called ‘commercial society’ that arose from the division of labour and which made people dependent on each other linked through market transactions.

He pointed out that Marx himself never used the actual word ‘capitalism’ and seemed to suggest that Marx regarded capital as a term of property ownership. In fact, Marx saw capital as the expression of a social relationship rather than as a legal concept. And he did use the adjective ‘capitalist’ to describe a particular ‘mode of production’, one where money was invested in production with the aim of ending up with more money, obtained by the exploitation of wage-labour for surplus value. So ‘capitalism’ would be where money-capital was invested in production rather than lent to governments.

Marx, too, noted the existence of Sonenscher’s ‘commercial society’ which he called ‘civil society’, also translated as ‘bourgeois society’.

Taylor’s second guest was Rainer Zitelmann, author of In Defense of Capitalism: Debunking the Myths in which, according to the blurb on Amazon, he ‘examines the ten most common objections to capitalism: capitalism leads to hunger and poverty, to rising inequality, to unnecessary consumption, to environmental destruction, to climate change and wars. Capitalism, its critics say, prioritizes profits over humanity, creates dominant monopolies, and undermines democracy.’

He is a strident free-marketeer who sees any state interference in the market as ‘socialism’ (so he sees ‘socialism’ everywhere). He defines capitalism as:

‘an economic system based on private ownership and competition, in which companies themselves are free to determine what and how much they produce, aided in their decisions by the prices set by the market’.

This differs from Marx’s definition which sees capitalism as the investment of money-capital in production with a view to increasing its value (making a profit), even if invested by the state. Zitelmann fails to mention profit at all or that it is how much of this that capitalist enterprises expect that determines ‘what and how much [and if] they produce’.

Zitelmann only had time to ‘debunk’ the first two of his ‘myths’ — that capitalism leads to hunger and poverty and that capitalism leads to rising inequality. His refutation of the first was that, as capitalism spread, it vastly reduced ‘absolute poverty’. But the socialist criticism of capitalism on this score is not that it causes world ‘hunger and poverty’ but that, despite the technological means to end it, capitalism can’t solve the problem; hungry and poverty-stricken people, having no money, do not constitute a market and so don’t count as far as capitalism is concerned.

Zitelmann’s response to the charge that capitalism leads to rising inequality was to say that there was inequality in ‘socialist’ countries too, a prelude to a rant against ‘socialism’ (government interference in the market) in general and conditions in Venezuela in particular. Clearly bluster to disguise the fact he couldn’t deny that in a system geared to making and accumulating profit there will be a tendency for the class of those with invested capital to grow richer.

This said, the poll he commissioned about what the word capitalism meant to people in different countries sounded interesting. He mentioned that in Britain only 14 percent thought that capitalism was improving things and that countries with the most positive opinion of capitalism were in order: Poland, the US, South Korea, Japan and Nigeria).

What is Capital? (1906)

From the April 1906 issue of the Socialist Standard

The Editor of the Clarion in replying to a correspondent, writes, “You evidently don’t understand the subject at all. No Socialist ever talks about ‘doing away’ with capital.”

An instance this, truly, of ‘the blind leading the blind !” To be consistent the Clarion should also maintain that no Socialist ever talks about abolishing capitalism—for capitalism obviously cannot end if capital does not cease to exist.

The Socialists of all countries are, however, decidedly agreed that capital must be abolished ; and the only explanation of the Clarion editor’s strange statement is that he lacks a knowledge of the economics of Socialism.

The matter turns upon the definition of capital itself, and apparently the Clarion holds the archaic view that capital is simply wealth which aids in the production of further wealth. This is no definition at all, for, as even Professor Marshall is compelled to admit, it is an inclined plane upon which no stable resting place is found until all accumulated wealth is included as capital.

Socialist economics gives a definite meaning to capital as that part of wealth which is used as a means of obtaining an income from the labour of others; in short, as wealth used to obtain “profit.” Modern economists have been compelled, in practice, to accept this definition under one form or other of words, in order to give any value at all to the term.

The object of the Socialist movement, therefore, is decidedly to abolish capital; to end the use of wealth as a means of extorting surplus-value from the working class. The absurdity of the Clarion position is obvious from the fact that any other than the Socialist definition of capital makes every navvy who owns a pickaxe, a capitalist !

The “doing away” with capital, however, no more means the abolition of the instruments of production than the abolitition of capitalism implies the doing away with mankind. Socialism ends the system of production for profit, and inaugurates production for social use; it necessarily does away with the use of the means of wealth production as capital, and turns them into social instruments for the good of the community.

Economics, however, was never the Clarion’s strong point.

Cooking the Books: Who needs the rich? (2005)

The Cooking the Books column from the December 2005 issue of the Socialist Standard

To be one of the idle rich these days £1 million is not enough, according to the private bank, Coutts & Co., who specialise in dealing with the accounts of such people. The “super-wealthy”, said Coutts’ chief executive Sarah Davies, was “a person who didn’t have to work if they chose not to, and who was able to lead a life of luxury” (Times, 18 October).

Twenty-five years ago £1 million would have allowed you to lead a life of luxury, defined as having a 5-bedroom house with two staff, an apartment and a yacht in the south of France, eating out twice a week in a posh restaurant, and going on three two-week holidays to a luxury destination. To lead such a life today you need, apparently, some £3 million.

Nobody could amass that amount by working. Those that do possess such a fortune will have got it either by inheriting it or by wheeling and dealing in the City or in property speculation, as a look at the Sunday Times annual Rich List confirms. In other words, they can only lead their life of luxury on the proceeds of the exploitation of those who do work. They are not the only ones doing this since the “fat cats” at the top of private and state industry who pay themselves bloated salaries and bonuses are at it too.

A million pounds is still a lot of money of course and would still allow a person not to work if they chose not to, though not the sort of life of luxury just described; rather not much above the average of the rest of us.

But it’s a measure of how non-rich most people are – and so have to go out onto the labour market to find an employer – that there are only 425,000 millionaires in Britain, which is under 1 percent of the adult population.

It couldn’t be otherwise of course, since the basis of capitalism is the wages system and, to work, the wages system requires that most people are forced by economic necessity to sell their mental and physical energies as the means of obtaining money to buy the things they need to live.

One old socialist definition of a capitalist was a person who has sufficient wealth and unearned income from it to avoid having to sell their ability to work. In other words, someone who plays no part in producing the wealth of society but lives off the backs of those who do. The pro-capitalist economist Keynes called such people “rentiers” and looked forward to their gradual “euthanasia”.

In Russia after 1917 they actually did this. The idle rich were dispossessed without compensation and went into exile. Some people thought that this meant the abolition of capitalism. But it didn’t: capitalism continued without them, but run by the state. The lesson of this was that if you abolish the super-wealthy and the idle rich you don’t necessarily abolish capitalism.

Capitalism is essentially an economic system (of capital accumulation out of the surplus-value obtained by exploiting wage- labour). It is this impersonal economic mechanism that wage and salary workers are up against and which involves their exploitation irrespective of who manages the system or benefits from it (whether private capitalists or those who directly control the state).

It is this system, not the idle rich as such, who are only a by-product of it, that socialists are out to abolish.

GB News and Gary’s Economics (2022)

From the December 2022 issue of the Socialist Standard

A recent slot for the Socialist Party on a GB News chat show (bit.ly/3Umo53W) revealed an interesting thing about what socialists are up against: not only do people not agree on what socialism is, they don’t agree on what capitalism is either. So when we’re arguing with a pro-capitalist, we should not make the mistake of thinking that we know what they’re defending, or that even they know what they’re defending. They might be talking about something else entirely.

The pro-capitalist on the show seemed to be arguing that the less-developed, 19th century ‘small-business’ economy was ‘real’ capitalism, in which the population supposedly shared in the general wealth and welfare to a far greater degree than today, when the world has been taken over by a hideous monster known as ‘corporatism’. As if to emphasise how terrible our modern corporate affliction is, he was perhaps tempted to overegg the pudding in relation to the Victorian incarnation of the profit system. Incredibly, he even summed up the conditions of workers in that age of slums, workhouses, TB, cholera and child labour as ‘they’d never had it so good’.

Which all goes to show, as regular readers know very well, the importance of precise definitions. It’s such second nature to us that it comes as a surprise to find that other people don’t operate that way. ‘Socialism’ in many people’s minds is just this cloudy amorphous notion that can easily mean anything to anyone. And apparently ‘capitalism’ too can mean anything.

For the record, you can see our definition of socialism in the Declaration of Principles, on page 23 of this issue, or on the website here (bit.ly/3Umo2Fi). And equally for the record, here is our definition of capitalism: a system of society based on the production of wealth for sale on a market for a profit. Things that are produced for sale are called commodities. Other societies had commodities, but their economies weren’t based on commodity production. Other societies produced things (of course they did), but those things weren’t produced primarily for sale so they weren’t commodities. Other societies had markets, but the markets weren’t the main reason for the production.

From this clear and straightforward definition it follows that any society which is based on production for sale on a market is a capitalist country, regardless of what that society might say about itself, eg. North Korea, Venezuela, etc. Many other consequences can also be logically derived, including the drive for perpetual growth, the super-concentration of capital, wildly increasing inequality, the tightening stranglehold of the rich on the machinery of power and propaganda, national and world wars, and global environmental devastation. Without that core definition, the architecture of economics falls apart into a miasma of vagueness and a tendency to discuss each issue in isolation, as if it was unrelated to the others.

An example of this kind of vagueness was evident in a recent Novara Media video (bit.ly/3TkQJBo) where Aaron Bastani, author of Fully Automated Luxury Communism (reviewed here – bit.ly/3UlGI8m) and sporting a funky MarxTM t-shirt, interviewed hip street economist Gary Stevenson, whose own YouTube channel Gary’s Economics (bit.ly/3tdDtE8) has been getting a lot of favourable attention lately, including from mainstream media.

Stevenson is a likeable, articulate and clearly passionate man who, having previously made a pile as a former top Citibank trader, is now on a mission to explain to ‘ordinary working-class people’ why it is that they are getting poorer while the rich are getting richer, and that, contrary to what they themselves pontificate about, ‘economics experts’ in universities and in the media don’t know or indeed care why this is. His jargon-free and swear-word rich elucidations of interest rates, inflation, gilt trading and national deficits feel like a breath of fresh air. He is motivated by an obviously sincere conviction that the poor are allowing themselves to be impoverished mainly because they don’t understand how economics works, which to an extent is self-evidently true, even if his trader’s take on it is not the same as ours.

One of his arguments is that governments make a fatal mistake simply handing money to the rich without having any means to tax it back again. This is a rather more sophisticated argument than the morally-motivated populist Tax-the-Rich agenda we’ve seen from groups like Occupy or individuals like US Democrat Alexandra Ocasio-Cortez. He’s quite right to point out that governments in general struggle to get money back from the rich through tax. Indeed that’s why governments rely largely on stealth-taxing the rich indirectly through the wages they pay to workers. He wants to tax them directly, though, because even though some flight of capital might occur, landed assets don’t move, and those assets can be taxed regardless of who owns them. Would the working class benefit if the state taxed the rich a lot more? In the short term perhaps in some ways through more public spending, but not in any way that would significantly transform their lot in life as wage slaves. And the rich would fight such taxes with every influence they can muster, because quite apart from financial considerations, big taxes make for a big state and they don’t want a state that’s rich and powerful enough to keep siphoning off their profits and interfering with their dodgy dealings.

So what’s the vagueness referred to earlier? Bastani, possibly somewhat overwhelmed by Stevenson’s charisma and fast-talking economic chops, seemed rather to have forgotten to get to the nub of what, for a Marxist, the conversation really ought to have been about. At one point Stevenson almost invites him to, when he says that, where he comes from in Ilford, people’s idea of capitalism is that’s it’s supposed to be a fair system where hard work, thrift and merit are ultimately rewarded, and they can’t understand why this doesn’t seem to happen in reality. That should have been the moment to nail down definitions, to identify exactly what capitalism was, and thereby to confront the question that was waiting all along like the elephant in the room – never mind trying to fix the unfixable, Gary, why don’t we talk about superseding the capitalist system itself, and having a society with no rich and poor, and no inequality in the first place?

Paddy Shannon

What drives the capitalist economy (2023)

From the December 2023 issue of the Socialist Standard

One thing that cannot change whilst capitalism lasts is the fact that workers, being forced to sell their working abilities to a capitalist by virtue of being alienated from the means of wealth production, will only be employed by the capitalist on condition that the value of what they are paid falls significantly below the value of their labour input – what they contribute in terms of their labour to the product in question. This surplus value is the source of the capitalist´s unearned income and is realised when that product is sold on the market.

This system cannot possibly allow that the workers should be entitled to the full fruits of their labour. A business, after all, is not a charity; it needs to secure what in economic parlance is called a financial return. The systemic need for a tiny minority to extract an economic surplus from the great majority makes it structurally impossible for all but this minority to live off an unearned income from what they invest.

By ‘need’ is not meant the desire on the part of those comprising this tiny minority to surround themselves with the trappings of ostentatious luxury. Self-enrichment is, in any case, more a want or a whim than a need. In this regard, Victor Hugo´s famous observation that ‘The paradise of the rich is made out of the hell of the poor’ could very easily be misconstrued. It is not out of some particularly malevolent, or sociopathic, disregard on the part of the rich for the plight of the poor (though, doubtless, one or two individuals might well live up to this caricature) that we have a problem of working-class economic distress.

Unfortunately, this way of thinking lends itself to an all too facile – not to say, downright misleading – approach to resolving that problem. According to it, this problem essentially boils down to the moral shortcomings or defects of particular individuals or groups. Thus, it is because of greedy bankers or heartless or uncaring corporations that we have homeless itinerants, grossly polluted waterways and third-world-type sweatshops in which impoverished machinists toil for a pittance in a gruelling twelve hour working day. If only they were more caring, more concerned, these kinds of issues would recede, if not disappear altogether. It is not difficult to see how such thinking can play directly into the hands of those fervent exponents of modern ‘philanthro-capitalism’ and its curious belief that the way forward is to harness old-fashioned patronising capitalist philanthropy with the skills and corporate insights of capitalist entrepreneurship.

The point is that whatever may personally motivate the individual capitalist this is really incidental or secondary to what actually drives the system they conspicuously benefit from. The spectacular personal fortunes of the minority are more the by-product of, than the objective behind, the systemic extraction of economic surpluses from the majority. The primary purpose of this extractive – or more precisely, exploitative – process is, rather, the capitalisation of those very economic surpluses that such a process gives rise to. Transforming them into capital ensures a future flow of such surpluses. It is a cyclical process that repeats itself over and over again and it is essentially what has delivered the grotesquely unequal world we live in today.

In capitalism, market competition between enterprises forces each enterprise to seek out ways in which it can enlarge its share of the market at the expense of its rivals. This is not a matter of choice. Just as the worker is economically compelled to seek paid work in order to live in a society in which almost everything comes with a price tag, so capitalists are economically compelled to become competitive (regardless of what her particular moral outlook on life may be). Failing to keep up with the competition means sooner or later, being squeezed out of the market by one´s more ruthless and single-minded competitors. In other words, being bankrupted, or maybe asset-stripped and gobbled up, by the latter.

To keep up with the competition you need to hold down your operating costs (and, in particular, your wages bill) as far as practically possible and, at the same, time boost your revenue – the money you receive when you sell your commodity on the market. Boosting your revenue typically involves trying to undercut your competitors pricewise. In theory, this should bring in more customers for you and at their expense. However, being able to reduce your prices (and keep financially afloat) requires investing in more productive technology, among other things.

That is where the need to have an economic surplus at your disposal is all-important. It is the very lifeblood of the system itself in much the same way that a vampire depends on the blood of its victims for its own sustenance. It allows you to finance the replacement of outdated and possibly worn-out equipment with new state-of-the-art machinery. Increased productivity means being able to reduce your unit costs – and hence your prices – below what your competitors can afford. The desired effect is to push them out of the market altogether, allowing you to capture their share of that market.

It is a ruthless game in which no prisoners are taken, and no holds are barred. If you don’t do to your opponents what this dog-eat-dog system bids you to do then you can be certain they will try to do it to you. It’s a case of ‘natural selection’ transferred to the economic domain.

In summary, then, businesses survive in the particular niche they occupy only by constantly striving to expand. Driving this whole process is the accumulation of capital out of surplus value.

Robin Cox

Briefing: What is Capitalism? (1984)

The Briefing Column from the October 1984 issue of the Socialist Standard

Money trick

All wealth is the product of labour. Every house, car, loaf of bread, everything that we use is brought into being by men and women applying their energies to the resources that other men and women have extracted from the environment. It is one of the contradictions of the class system, though, that the great majority of people — the wealth-producing class — consume and enjoy only the crumbs of the wealth they produce. The construction workers who build the palaces and the mansions return at the end of a hard day’s work to live in council hovels or at best an up-market suburban slum. The wealth producers are trapped in poverty because of the wages- system of legalised robbery. The factories, farms, mines, offices, communications systems — in fact, the means of life — are owned and controlled by a small minority of the world's population. The wages or salaries with which the wealth producers are fobbed off are worth less than the value of what has been produced, so that the boss receives a value from the efforts of the worker over and above what is paid for. The surplus value kept by the owners of industry becomes profit when the goods are sold on the market.

When the social system is looked at from this point of view, a couple of important points become apparent: first, that whether wages are “high” or "low" the people working for them are being exploited; and second, that it is the system of producing goods and services for a profit which condemns the majority to live lives of unnecessary poverty. Occasionally, the absurdity of the class system exhibits itself in stark madness. A couple of years ago the workers who produced the engines for the Concorde aeroplane were given a special concession by their bosses. The workers who, although they were responsible for making the plane would never be able to afford to travel in it. were permitted to take their families on a tour of their work for a price of 50p. The tours would need to be brisk as they could not keep the wealthy ticket holders hanging about drinking champagne in the departure lounges for too long.

Rolls Royce is now trying the same sort of thing:

A big pools win would be the only way most workers could get to own a Rolls Royce. but 3.800 employees at the firm's works in Crewe. Cheshire, now get a 90-minute taste of high life. (Daily Telegraph, 8 August 1984)

The scheme will operate for about 18 months while all the workers whose efforts actually produce the cars will be able to cruise about the countryside for an hour in a £56,000 ice-green Silver Spirit. The chief executive of Rolls Royce, Richard Perry, observed that: "People have worked here for forty years and have said afterwards that this had been their first chance to sit in one of the cars".

Capitalism commits a continuing con-trick on the working class every moment that it is allowed to carry on. It is only fallacy and prejudice that obstruct the path to a classless society.

False Images

From the time when we are first shown an atlas or a globe we are given a false image of the world. The map is divided into over 150 separate countries and we are indoctrinated with the idea that is is only right and proper to develop an allegiance to "our" country. We are taught that we should use possessive vocabulary in relation to the country although we own nothing of it. We are taught to have respect and admiration for a sterile, stately-home culture of which we have no part and most importantly we are taught to accept the possibility that one day we might be called on to fight and kill strangers (who will have been similarly misled) in furthering the cause of our bosses if economic rivalry is extended from the conference table to the battlefield.

There is one working class comprised of men and women all over the globe who share an economic condition: we own nothing except our mental and physical energies and we need to try to sell these on a weekly or monthly basis, to a boss, in order to make a living. We may have different languages and different cultures but what we have in common is much greater and more significant than how we differ. A print worker in England will share more experiences and problems with a French print worker than he will with an English Press tycoon. There are other illusions flowing from an image of the world as lots of independent nations. The world now has a highly integrated industry. The labour which goes into producing most articles is divided among many men and women performing specialised jobs. This fact, taken with the restriction of certain products to particular global regions and climates, means that the energies which go to produce a particular item can come from all over the world.

Take the example of a typewriter and consider what was needed to make it: the different types of metal, the plastic, the rubber and the technology of its design. Each of these could trace its origins to a different place and then the same analysis could be applied to the ships and aeroplanes which were used to transport the various materials and components around the world. Because of the way commerce and world trade operate, countries with apparently opposed political ideologies in fact are engaged in trade. American farm owners sell wheat to the Russian ruling class; the Russian ruling class colludes with its counterpart in South Africa to fix the price of diamonds on the world market and the Russian Empire even helps to arm American missiles by playing a part in manufacturing plutonium which is later used for American warheads. Western governments. including Britain, have been shipping uranium to Russia for enrichment (of the government as well as the uranium) knowing it was for nuclear warheads.

The Left Wing of Capitalism

"Yes. I agree that a classless society is a good idea but the reason I support the Labour Party is that while we have got capitalism things are marginally better if there is a Labour government.”

Socialists firmly reject this sort of argument. The profit system is a way of running society which is against the interests of the working class, the majority of people. It works on the basis of producing wealth only if there is the prospect of selling it for a profit on the market, not simply because there is a need for it. So if you have a need which you cannot afford to have satisfied then your need will continue. In this system there is a constant antagonism of interest between master and servant, or to use the more decorous expression for the same relationship, between employer and employee. The bosses strive to get as much as possible from the workers while paying them as little as they can get away with whereas the workers seek to reduce the extent to which they are exploited.

The Labour Party has never sought to do anything but run capitalism and consequently when it has formed the government (as has happened seven times) it has found itself doing all the anti-working-class things which it vehemently opposes when they are carried out by Conservative governments. Apart from supporting wars, introducing the atomic bomb in Britain and establishing the Special Patrol Group (SPG), the Labour Party does not enjoy a proud record on the industrial front. Labour supporters who are rightly sickened by the sort of problems being faced by the miners and the dockers would do well to look at their party’s record on these issues. The National Coal Board has plans to shut unprofitable or “uneconomic” pits for the same reasons that pits were shut before 1945 by private capitalist owners and for the same reasons that 48 Welsh pits were closed and 50,000 miners made redundant under the Labour government between 1964 and 1970.

Then consider the struggle of the dockers. The last time troops were used to break a dockers' strike anil unload ships was under a labour government during a spate of dock strikes in 1949-50. In May 1949, after an outbreak of unofficial strikes in support of Canadian dockers, the Labour government invoked Defence Regulation 1304 and used troops to unload fruit and refrigerated food at Avonmouth. The use of troops caused the strikes to spread. By July 8 10,000 men were on strike and the government announced that unless wage-slavery was resumed a state of emergency would be declared. The Labour government invited the King to sign such a declaration three days later.

Despite this, the number of men on strike rose to 15,000. Prime Minister Attlee became angry. Who did these workers think they were, telling the bosses they were not satisfied! Attlee proclaimed that he was prepared to send 35,000 troops into the docks and the strike collapsed within two weeks. Troops were used again by the Labour government in April 1950 when another strike was thwarted in the Port of London. Troops have been used by governments since then during strikes, for instance in the emergency services, but never for wholesale strike breaking. During the firemen's strike 1977-78 the Labour government again sent in the troops with the Green Goddess fire engines to undermine the industrial action of members of the working class struggling to stop their standard of poverty becoming even worse. The economic hardships of this society have not been personally engineered by Margaret Thatcher and cannot be talked away by Neil Kinnock. These problems are an intrinsic part of a class-divided society.

Inhuman priorities

As this social system grinds on the contradiction between a society potentially geared to abundant production and a society poised on self-destruction becomes more stark. We could produce so much. We could meet all the needs of the population of the world. But we continue in artificial scarcity and to add further horror to the nightmare we continue to amass the means of destruction.

According to Oxfam. (Guardian, 5 August 1981) over 30,000,000 people die of hunger every year, more than half of them children under five. Every year 780.000.000 people are suffering from hunger and malnutrition. At the current rate these figures will have doubled by the end of this decade. In the last hour about 1,700 children have died unnecessarily, victims of malnutrition, disease and war. Figures are often formulated to express the grotesque priorities of the profit system by contrasting the expenditures on the industry of health and the industry of death: the Defence Research and Development programme of £1.8 billion is 16 times greater than that given to the Medical Research Council; one Army General is paid more than five State Enrolled Nurses; the upkeep of one nuclear submarine is greater than the annual cost of local authority libraries and UNICEF working in 112 countries has a total income of under £200 million which is the equivalent of what the world spends on military ventures every four hours.

These facts exemplify the priorities of capitalism. What should be done about this? Socialists do not advocate that more money be spent on welfare as a solution to the problem. Capitalism, based on producing for profit not need, creates these tragic disasters as a matter of course. Trying to solve them with charity or adjustments in spending cannot work, despite all the energy and drive which has been contributed by the people who work for the various voluntary and charity organisations. The way to solve these problems is to establish a society which will work on the principle of “from each according to ability to each according to need", a society in which our productive forces will be used directly to satisfy our needs.

Gary Jay

The End of the Market (2008)

From the August 2008 issue of the Socialist Standard

Is there an alternative to the market and what is it?

‘The market’ may be taken as a generic term to include markets of all kinds: places (not necessarily physical) in which goods, services and people are bought and sold, offered for sale, rejected or bargained over. Markets imply a medium of exchange, usually money in some form, although barter is a form of exchange without money.

The market system is one way of regulating relations between producers and consumers and between owners of capital and labour. There are in fact three ways of regulating relations between producers and consumers: by the ‘free’ market, by the unfree or controlled market and by no market. These represent market capitalism, state-controlled or ‘command economy’ capitalism, and socialism respectively.

No society has been or is 100 percent free-market capitalist. Every human activity and item of wealth would have to be marketed to make it so. No society has been or is 100 percent state-controlled capitalism. Some private enterprise or free marketing was always allowed or even encouraged in so-called communist countries. The principle of ‘no market’ means simple giving and taking based on understanding, reasonableness and trust. It is present in some activities and some goods and services in all societies, in domestic and voluntary work, for example. But nowhere (except in small communities) have productive and social relations been dominated by the non-market principles of common ownership and free access. In other words, since the first form or property was introduced in ancient civilisations, some form of class society based on some form of possession and market transactions has always been dominant.

The history of the market would make a fascinating subject for research, but there is no space to go into it here. However, a few words about the relative strength of free-market capitalism and state capitalism during the 20th century may be useful.

State capitalism probably reached its high point with the establishment of the Soviet Union in 1917. Fraudulently using the labels of socialism and communism, the leaders of the Communist Party put as much economic activity as possible, including markets, under the control of the state. Eventually, the controlled, centrally organised, ‘command economy’ form of capitalism proved less efficient than the ‘mixed economy’ form, and now the former Soviet Union countries are as free-market capitalist as most other parts of the world.

In post-war Britain there was a similar reaction against free-market capitalism. Beveridge reorganised poverty in the welfare state. The original National Health Service enabled people to get glasses and false teeth free at the point of consumption. This was hailed as socialism, but again it was a fraud. The best that can be said of such measures is that they were the result of a feeling among supporters of capitalism that it could in some respects be better run by the state intervening on behalf of all capitalists rather than letting uncontrolled market forces produce too much inequality and discontent.

Today free-market capitalism is in the ascendancy around the world, despite all its crises. Not everything is privately owned and bought and sold in a market, but more and more industries and services are being privatised. As compared with a century, or even a decade, ago, what might be called the market for markets has grown enormously. To take just a few examples, labour markets for parliamentary lobbyists, spin doctors and corporate headhunters have developed. Bankruptcy specialists and leisure consultancies are flourishing. Sperm is marketed on the internet. In the information market, business skills video providers rub shoulders with computer dating agencies and weather forecasting bureaux. Genetic testing at a hefty price will tell customers who is the real father of their child. In Japan if your child is short of a grandparent you can go into the market and hire one.

Of course, market penetration, as it is called, is never complete. Much human activity is still outside the market. However, it is not too cynical to say that if a way could be found to bottle the air we breathe, such a market would be created. Domestic work, voluntary work, and serious leisure are largely, but not wholly, outside the market. We still have to buy household cleaning items, but we don’t usually charge for doing the washing up. About one in six people in Britain – more in America – give up some of their spare time to help others voluntarily (though some employees do paid work for voluntary organisations). Serious leisure – regularly getting together with others to pursue common interests for pleasure – is mostly a non-market activity (though some participants have to buy things from the market to pursue their serious leisure).

What are the good things and the bad things about the market system? The good things are said to centre around being able to exchange things, stimulate competition, and produce new goods and services. It is claimed that without a means of exchange, expressing the price at which goods and services are bought and sold, no one would be able to exchange what they had for something they needed. Obviously, within capitalism this is true: without a labour market (free or controlled) no one would be able to sell their labour power and ‘make a living’. But this is only because both capitalists and workers accept that labour is a commodity to be bought by the capitalist class or the state and sold by the worker. If, instead of being in the hands of a small minority, the means of wealth production were common property, then that ‘advantage’ of having a market would disappear. We wouldn’t need to sell our labour power to live, and it wouldn’t be possible for capitalists to buy it and live on the surplus value it creates.

A second supposed advantage of the market system is that it stimulates competition, especially if it is ‘free market’. This means that buyers shop around for what they want (or are persuaded to want) at the cheapest price, while sellers hold out for the highest price. This may sound a good idea if you are deciding which supermarket to shop at for the best bargain, but it’s not so good if you are competing to sell yourself on the labour market. You may get a slightly better wage or salary if you join a union, but there is no guarantee you won’t be ‘priced out of the market’, i.e., sacked and unable to compete successfully for another job.

A third stated advantage of the market system is that a market can be created for almost anything – in theory for everything. Is this such an advantage? As compared with feudalism and early capitalism, late capitalism offers those with money a myriad things to buy – unnecessary things, ludicrous things and sometimes harmful things. A fourth television set for the bathroom, a fashion haircut for the dog, a state-of-the-art security system or weapon to protect yourself against robbers. The worst obscenity is the indifference to real poverty and suffering that the market-mediated pursuit of trivia brings: people worry if they miss an episode of their favourite ‘soap’ while millions in the world starve.

Now for the bad things about the market system. I have already touched on some of these when questioning the good things. The labour market is unlike all other markets in two respects. The owners of labour power have to sell something that is capable of producing more than its own cost. And, by having to sell themselves rather than something they possess, they are at the mercy of the buyer, who can dictate, with the help of the state, not only the terms of the transaction but whether it takes place at all.

Competition is an essential feature of the market system. It rewards winners and penalises losers. Socialists may disagree about whether all competition will disappear in a socialist world (I would personally argue that playing games and sports where there are inconsequential winners and losers can develop skills and be good fun). But the kind of cut-throat competition engendered by capitalism cannot be justified. Making excuses for the excesses of the competitive market system is a kind of Nuremberg defence: ‘I was only carrying out orders given by my customers’. The invisible hand of the market can be a cruel hand, destroying and damaging its victim losers, while enabling its ‘top’ winners to live selfish, pointless and distorted lives.

The waste involved in the market system is tremendous. Think of all the useless and harmful jobs (often dignified by the title of profession or career) that are created. People working in banking, insurance and financial services produce nothing of real value, nothing that a society based on production for need and free access couldn’t happily do without. Commercial advertising uses up far more human and material resources than required to inform people of what is available. The worst example of waste is war and preparation for war. A mind-boggling $1,000,000,000,000 is spent each year on this around the world. Countless deaths and injuries have been caused by weapons used to defend and acquire markets and associated spheres of influence in which the workers of the world have no real interest.

To turn now to the marketless, moneyless world that will replace the capitalist market system. First, the absence of money, though it is certainly a feature of socialist society, is not a defining characteristic of that society. The absence of money is a negative idea. Money will not be needed as a means of earning a living or registering the ownership of capital (incidentally, money may well survive but only in inconsequential money games or historical re-enactments).

The positive definition of socialism is a society in which the means of wealth production and distribution will be commonly owned and democratically controlled in the interest of the whole community. It will only be possible when a majority of people (workers) understand, want and work for such a revolutionary change. They will work, not in a labour market, but to produce goods and services that they and their fellow human beings need.

Marx once said that he didn’t want to write recipes for future cookshops. We can agree with him that we shouldn’t try to draw up blueprints for the details of how to run a socialist world of the future. The people at the time will decide those details. But we ought to be interested in principles, in the ingredients to be used and the social relations to be entered into in future cookshops and other places.

A socialist world will only be possible by people behaving in pro-social ways. We do not ask for a fundamental change in human nature. None is needed. Even today, with the market system dominant and people encouraged to look after themselves first, most men and women behave pro-socially when they see someone in need of help. Market forces are forces alien to the best in human nature (human behaviour would be a better term). The building of the world socialist movement is a task for those not passively submitting to the discipline of the market but able and willing to help create something better for themselves and their fellow humans.

Stan Parker

Descriptive economics (2008)

Book Review from the August 2008 issue of the Socialist Standard

Economics for Everyone By Jim Stanford (Pluto Press)

This is a very readable description (rather than analysis) of how capitalism works, at least in the form we know it at the moment. At first sight, Stanford’s definition of capitalism seems alright:

“There are two key features that make an economy capitalist.

1. Most production of goods and services is undertaken by privately-owned companies, which produce and sell their output in hopes of making a profit. This is called production for profit.

2. Most work in the economy is performed by people who do not own their company or their output, but are hired by someone else in return for a money wage or salary. This is called wage labour.”

Production for profit and wage labour are indeed defining features of capitalism, but elsewhere Stanford makes it clear that he thinks that it is not production for profit as such that defines capitalism but only production for private profit. “One defining feature of capitalism”, he writes later, “is that most production is undertaken to generate private profit”.

But this is to ignore the experience of the former USSR and of nationalised industries in the West, where the economy was still based on wage labour but where those who controlled the State or who ran the state-owned industries still undertook production to generate a profit extracted from the labour of the wage and salary workers. He has made the same mistake here as the old Labour Party thinkers who identified capitalism only with private enterprise capitalism, completely ignoring state capitalism (which in fact they were in effect advocating).

Because his approach is purely descriptive, Stanford dismisses Marx’s labour theory of value on the grounds that it can’t be observed directly. It is true that the market price of goods is not a direct reflection of the amount of what Marx called “socially necessary labour-time” incorporated in them, but is fixed by enterprises adding the going rate of profit to the costs of producing them. But the going rate of profit can only be adequately explained on the basis of the labour theory of value (as an averaging amongst capitals of the total surplus value produced).

Stanford accepts – because it’s obvious – that wealth can be produced only by work on nature-given material, but because his approach is purely descriptive he has to explain profits as a sort of ransom extracted from workers by private capitalist firms by virtue of them having private property rights over means of production. This is one way of putting it but, without a theory of value as well as a theory of price, there is no way of establishing the amount and limit of profits. In fact, Stanford says that if the “perfect competition” of the economics textbooks existed it would reduce profits to zero as goods would sell just at their cost price. Marx’s labour theory of value explains why this wouldn’t happen and why the price of goods would still contain some surplus value.

Stanford is also wrong about banks. He seems to think that they simply create credit as they wish, to lend to private industry and to individuals. Banks do indeed lend money and they do have a choice of who to lend to and when and this does have economic consequences, but they can only lend what has been deposited with them or what they have borrowed from other banks and financial institutions. They do just recycle spare money.

Stanford, an economist working for the Canadian Auto Workers union, writes as an open reformist who would like to see capitalism reformed so as to be what it is like in the Scandinavian countries. Although this is disappointing, it is heartening to see criticism of capitalism surfacing again and being given serious consideration.

Adam Buick

Letters: Punk rock (2002)

Letters to the Editors from the July 2002 issue of the Socialist Standard

Punk rock

Dear Editors,

When I began reading the article on Punk rock in the June issue, I wondered if I had got the date wrong and it was one of those April 1st spoofs beloved of the Guardian. I was surprised to see so much valuable space devoted to so much pretentious twaddle. It’s bad enough to read this sort of pseudo intellectual rubbish in the Daily Telegraph, least of all in the Socialist Standard.

Denham Ford, 

Westcliff-on-Sea, Essex

Reply: 

We can understand that punk music can’t be everybody’s cup of tea but it was a significant social phenomenon in its time and its jubilee was certainly worth commenting on more than the other one—Editors.

Capitalism defined

Dear Editors,

Capitalism has been defined as a political economy based on commodity exchange and surplus value. Thus under capitalism economic production portrays the implicit class interests of the bourgeoisie and not the satisfaction of general social needs as such.

Commodity production alienates the working class from the physical objects of their labour. Their social essence as members of civil society comes to be determined by the money wages obtaining under existing conditions. The working class’s engagement in economic production ends in the creation of commodities.

The realisation of surplus value thus becomes the major factor motivating economic production under capitalism. Commodities and social goods are created not for unrestricted consumption but for sale.

The nature of the working class social deprivation under capitalism warrants no further elaboration other than the sanctification of unemployment, inflation and social poverty in every capitalist society. Because economic production is undertaken in order to realise surplus value the full satisfaction of the basic social needs shall always remain unrealised under capitalism.

Scientific socialism aims to change the fetishistic economic framework of capitalism. The eradication of capitalism will entail a class war between the state and civil society that can only be realised through a working class inspired socialist revolution.

The illusory projection of political and economic freedoms under abstract and fictitious entities abstracted from the immediate reality of civil society has led to the blind acceptance of the political state as a universalisation of human freedoms. The political and economic interests of civil society come to depend upon the arbitrary whims and fancies of political elites. The political state illuminates the unrealised political and economic freedoms that cannot be realised under the intrinsic economic relations based on competition.

The division of labour has suppressed labour’s potentialities for individualised self-realisation by subjecting its mental and physical potentialities to the limiting conditions of the commodity market. The division of labour is a fetter upon labour’s physical and mental potentialities and limits its self-realisation. Thus the eradication of capitalism will liberate labour from its restricted social conditions under the division of labour.

Karl Marx and Frederick Engels developed and formulated their systematic and dialectical premises of dialectical materialism while domiciled in England. Their critical analysis of capitalism was heavily influenced by political and economic transformations taking place in the 19th century. Thus the scientific and dialectical assumptions of Marxism are open to further historical development that may transcend the predictions of Marx’s own theories.

Kephas Mulenga, 

Kitwe, Zambia

Answers to Correspondents. (1930)

Letters to the Editors from the June 1930 issue of the Socialist Standard

Why not join the Labour Party?

The Editor, the Socialist Standard.

Isleworth, Middx.

May 16th, 1930.

Dear Comrade,

Why this continuous attack upon the Labour Party: The Labour Party has declared in belief in Socialism, and the aim of all Socialist bodies and Socialists is to obtain Socialism in the shortest possible time.

How can this end be attained? ‘By holding meetings,’ by talking to our fellow-workers, and by the distribution of literature. Yes, all these methods can be employed and have been employed in the past. But are they sufficient? Is it not perfectly obvious that by these means we can only hope to make a few among the many thousands into competent Marxists, and that even those few must do some hard thinking and hard reading if they really wish to understand. But the majority of them live under conditions which compel them to think about the immediate necessity of getting a living, and therefore are not interested in Socialism as a distant theory.

If, however, we talk to them about things they do understand, such as the houses in which they live and the education which is given to their children, then we have some hope of getting them interested, and if we can hold out the prospect of improving things in the immediate future then we can not only get them interested hut we can get them to work hard in order to attain the aims of the party. Having got them into the party and made friends of them, we can now teach them Marxian economics and make real Socialists of them.

There are many competent Marxists within the ranks of the S.P.G.B. Would it not be better policy for them to get inside the ranks of the Labour Party and carry on their educational campaign there?

Come on, comrades, there is plenty of work to do and too few people to do it, and if we are going to get our objective we must use every means that offers. These people are already prejudiced in favour ; hundreds of them are young and intelligent—the very soil on which the seed should be dropped. Yours fraternally,

A. F. Forrest.

Our Reply.

Our correspondent’s picture of the Labour Party is purely fanciful. It is seeking to establish not Socialism, a system of society based upon common ownership of the means of production and distribution, but nationalisation, or State Capitalism. The Post Office is its model ; an institution which is privately owned by investors in various Government loans, and whose services are not provided freely for use, but sold in order to produce profit, just like other capital concerns.

Our correspondent envisages the Labour Party winning and retaining the “friendliness” of the workers by “improving things” for them. We deny that a Labour Government, elected by non-socialists, is in a position to carry out its promises of improving things. Has our correspondent considered what is going to happen when workers who voted Labour find that the improvement does not materialise ? Does he think that the reduction in wages of cotton workers and wool workers, and the half-million men thrown out of work since the Labour Government entered office, are steps on the way to Socialism, and calculated to make the workers more friendly to those responsible?

Our correspondent’s arguments are self-contradictory. He first tells us that the Labour Party is committed to Socialism, and then urges us to get inside in order to convert them. Convert them to what? In truth, the overwhelming majority of Labour Party supporters are ignorant of the elements of Socialist knowledge, and to talk of them having declared their belief in something which they do not understand, is merely the evasion of an unpalatable truth.

If we wished to enter the Labour Party (which, of course, we do not) we would most certainty not be permitted to carry on our propaganda for Socialism, for the reason that it would involve, as it does now, pointing out that the programme of reforms of that Party is valueless to the working class.

Our correspondent also assumes that the Labour Party desires to provide its members with Socialist knowledge. We deny this, and ask our correspondent for evidence that the desire, let alone the effort to that end, exists or has ever existed. If it exists, why does not the Labour Party use its press and its platform for that purpose?

Editorial Committee.

The Capitalists and reforms.

A correspondent suggests that the Capitalists will introduce a large number of reforms in order to dissuade the workers from interesting themselves in Socialism. He asks whether such reforms will, to any degree, make the conditions of the workers better.

If the Capitalists were agreed on the question, there is no reason why the position of the working-class should not be improved at the cost of the Capitalists themselves, but such agreement is not easily achieved. Even in those cases where Capitalist politicians perceive the advisability of a more generous treatment of some of the victims of the system, it is difficult for the Capitalist politicians to convince their backers that need exists, or that “generosity” is the way to deal with discontent. Occasions often arise of the Lloyd Georges, and Baldwins and Churchills of Capitalist politics being forced by their more stupid and ignorant supporters to carry out policies which go against their better judgment and their human sympathies. Future historians will probably be amazed at the appalling meanness (unnecessary, from a Capitalist standpoint}, of the treatment meted out to the victims of war and of unemployment, at the present time.

Even when the workers in large numbers go over to the Socialist Party, there will still be influential sections of the Capitalist class (with their working class followers) who will resist reforms, either on the ground that they are “demoralising” to the workers, or that they hamper trade, or that they merely encourage the workers to ask for more. It is, therefore, probable that reforms will always tend to lag somewhat behind the evils which Capitalism goes on producing.

Editorial Committee.

What is Capital?

An enquirer asks why we talk of abolishing Capital, since, in his view, Capital merely means machinery, tools, etc.

Our correspondent is in error. Capital is wealth used for the purpose of profit. Wealth not used for the purpose of profit is not Capital. When the tools, machinery, buildings, etc., cease to be used for profit, they will not be Capital. The abolition of Capitalism will leave the means of production to be used for the purpose of producing articles for the use of the members of society. There will be no question of private profit, and, therefore, no question of “Capital.”

Our correspondent goes on to suggest that “money, or, more truly credit-power,” will be needed under Socialism. This is incorrect. Under Socialism, there will be no function for money to perform. Money is a means of trading between the private owners of goods of various kinds. Where private ownership does not exist, the possibility of exchange, of buying and selling, disappears. The processes which will be necessary under Socialism are the production of useful articles and their distribution to those who need them. Exchange does not enter in, and money is not required. If our correspondent bears in mind that the means of production will be commonly owned, and the products freely distributed, he will see that money can have no function to perform. Looking at it in another way, he will see that money, by its nature, cannot be “commonly owned.” To contemplate individuals holding stocks of money under Socialism is to contemplate the possibility of private persons being able to purchase the means of living of other persons—which is, on the face of it, incompatible with our definition of Socialism.

Communism or Socialism?

Finally, our correspondent asks if Communism and Socialism are terms which mean the same.

It is not a sufficient answer to trace back the original and interim meanings of the words, because the use of words changes from one generation to another. The chief point is that when we use the word Socialism we define it carefully. (See object on back page.)

Those who use the word Communism, define it differently from our definition of Socialism, or do not define it at all.

In popular usage, the word Communism is associated with the anti-working class policies of the Communist parties. Nothing whatever is to be gained by using two words interchangeably when one will do. Therefore, we do not use the word Socialism to mean the things ordinarily intended by those who use the word Communism.

Editorial Committee.

50 Years Ago: What is Capital? (1956)

The 50 Years Ago column from the April 1956 issue of the Socialist Standard

The Editor of the Clarion in replying to a correspondent, writes, “You evidently don’t understand the subject at all. No Socialist ever talks about ’doing away’ with capital.”

An instance this, truly, of “the blind leading the blind!” To be consistent the Clarion should also maintain that no Socialist ever talks of abolishing Capitalism—for Capitalism obviously cannot end if capital does not cease to exist.

The Socialists of all countries are, however, decidedly agreed that capital must be abolished; and the only explanation of the Clarion editor’s strange statement is that he lacks a knowledge of the economics of Socialism.

The matter turns upon the definition of capital itself, and apparently the Clarion holds the archaic view that capital is simply wealth which aids in the production of further wealth. This is no definition at all, for, as even Professor Marshall is compelled to admit it is an inclined plane upon which no stable resting place is found until all accumulated wealth is included as capital.

Socialist economics gives a definite meaning to capital as that part of wealth which is used as a means of obtaining an income from the labour of others; in short, as wealth used to obtain “profit.” Modern economists have been compelled, in practice to accept this definition under one form or other of words, in order to give any value at all to the term.

The object of the Socialist movement, therefore, is decidedly to abolish capital; to end the use of wealth as a means of extorting surplus-value from the working class. The absurdity of the Clarion position is obvious from the fact that any other than the Socialist definition of capital makes every navvy who owns a pickaxe, a capitalist!

The “doing away” with capital, however, no more means the abolition of the instruments of production than the abolition of Capitalism implies the doing away with mankind. Socialism ends the system of production for profit, and inaugurates production for social use; it necessarily does away with the use of the means of wealth production as capital, and turns them into social instruments for the good of the community.

Economics, however, was never the Clarion’s strong point.

(From the “Socialist Standard," April, 1906)

Who are the capitalists? (1927)

From the November 1927 issue of the Socialist Standard

“Every Man a Capitalist” is the title of an article written by Sir Sydney Low, and published in the “Sunday Pictorial” (2.10.27). The sub-title is “‘How Wealth is Spreading Amongst the Workers.”

Sir Sydney accuses Socialists of being “dealers in popular unrest,” and states that for years past we have been saying that “the rich are growing richer and the poor becoming poorer.” Also, we have said this so often and so persistently that many earnest persons who are not Socialists are inclined to believe there must be some truth in the indictment. In fact, there is none. So says Sir Sydney.

Of course, we are very pleased to hear that we are making an impression upon “many earnest persons who are not Socialists.”

To show that the rich are getting poorer, Low tells us “they are not spending extravagantly, their lives are simpler and less luxurious than they used to be.” These unfortunate people are parting with “their large, expensive houses, and offering their estates for sale. Many of them protest that they are living upon their capital in order to pay their way.”

This is all very sad, but it is not proof that the rich are getting poorer. They may not be spending extravagantly because they desire to invest more; they may be living less luxurious and more simple lives in the interests of their health. But the really important point, which Sir Sydney overlooks, is that large estates cannot be sold unless there exist purchasers. Unless, therefore, he believes that the large estates are being bought up by unemployed miners and others who have been compelled to relinquish their former occupation, there must still be rich people willing to be extravagant and able to afford it.

Another factor ignored by Sir Sydney Low is that many of these estates have been broken up merely because of the tempting opportunity of netting big gains, owing to the demand for building sites.

Then to show how every worker tends to become a capitalist, Sir Sydney refers to the increase in the number of privately-owned motor cars. He says : “By the end of this year there will be 700,000 self-propelled private vehicles in England. And who owns them ? For the most part people of moderate and even small means.”

Our opponent, evidently thinking this fad not sufficient to convince the sceptical, put forth further evidence to show that some day every worker will be a capitalist. This time it is houses. He tells us that “since 1923 600,000 new houses have been bought by middle class and working class tenants.” These houses have been built with State, or municipal, aid. And then “hundreds of thousands of others already in existence or erected by private builders have been sold to occupiers of the same kind.”

“House owning,” he goes on, “is not the only method whereby the man of limited income is turning himself into a capitalist. He tends more and more to become an investor.” As evidence, Sir Sydney informs us, “National Savings Certificates are now issued to the value of over £642,000,000. It may safely be asserted that almost the whole of that £642,000,000 represents capital belonging to the small investor.” But does it in fact?

In 1922, that is, before the workers’ savings had been drained by five years of trade depression, unemployment, short time and lowered wages, the Montague Committee were only able to express the opinion that “at least half” of the total sold up to the 31st March, 1922, represented the subscriptions of small investors (see Colwyn Committee Report, page 21).

Mr. W. T. Layton, the Liberal economist and statistician, estimates that small investors hold £455 million out of a total £6,592 million, which makes up the Internal National Debt, the magnificent proportion of 7 per cent. (“Economic Journal,” June, 1927, p. 204.)

However, enough! Is it the private ownership of a motor car, whether a Ford or a Rolls-Royce, that makes a person a capitalist? No. Is a man a capitalist because he owns the house in which he lives? No. Is it the possession of a few Savings Certificates that makes a man a capitalist? No.

What, then, is a capitalist? A capitalist is one who owns enough property in the means of living such as land, factories, railways, steamships, raw materials, etc., to be able to live without needing to work. The income derived from this private ownership frees the capitalist from the necessity of working for his livelihood.

It may be asked, what, then, is a worker?

A worker is one who, not owning any or sufficient property, is forced to sell his labour-power to the capitalist class, in order that he may live.

Sir Sydney speaks of the “lower middle class and the “higher working class.” This is “confusion worse confounded” as there are only two classes in modern capitalism, those who live by working and those who live by owning. And, as shown above, it is the manner in which a person obtains his or her livelihood that places him or her in one of these two classes.

As to wealth spreading out amongst the workers, heaps of evidence could be put forth to show the contrary to be true. First of all the workers are painfully aware of the constant dwindling in their wages, and ever-present unemployment.

In the report of the Ministry of Health, 1926-27, it is stated : “Poor Law Relief has risen nearly 350 per cent. since 1914, but outdoor relief has risen by over 1,000 per cent. The number of persons receiving out-relief were, in 1914, 387,796; 1927, 1,722,084 ” (“Daily News,” 16.9.27).

Then Mr. Harold Cox, who is a defender of capitalism, writing in the “Sunday Times,” 31.7.27., says: “In round figures pauperism in 1914 represented 21 per 1,000 of the population, and in 1927, as stated above, just under 40 per 1.000. It is, therefore, not far from the truth to state that the proportion of paupers to self-dependant citizens has doubled since 1914.”

The above facts show the falsity of Sir Sydney Low’s argument. As capitalism develops, the major portion of the wealth produced ccncentrates still further into fewer and fewer hands. It is, therefore^ obvious that the poverty of the mass must increase relatively to the wealth of the propertied class.

And as bad as the lot of the workers may be at the moment, it will tend to become worse with the further development of capitalism.

The only solution to the poverty problem of the working class is not for individual workers to buy a motor car, a house, or a few Savings Certificates, but to organise in the Socialist Party in order to do away with capitalism, the cause of their poverty, and to bring into existence Socialism, the social system which will free them from poverty.

C.