Waste and want—the insane logic of capitalism

From the April 1984 issue of the World Socialist

The vast majority of the population of this planet live in want to one degree or another whether they be industrial workers in Western Europe or North America trying to make ends meet, or beggars on the sidewalk in India, or even beggars on the sidewalk in the USA.

Yet they seem to blindly accept that this is the inevitable consequence of things—and in the particular context of capitalism they are right. Various degrees of want will always exist in a private-property based society where all production is with a view to profit and where the majority sell their labour-power in return for a part only, expressed as wages, of what they produce.

Poverty, hunger, disease

When he advocated Medicare for the aged in 1962, Kennedy spoke of 17 million hungry Americans and said the average American retired with less than $3,000 in assets. In 1964 Fortune Magazine revealed that a survey showed that 6 million people were living in families whose incomes were so low that they qualified for free food from the government, that 7.3 million Americans lived in housing classified as dilapidated, and that there were nearly 2 million families who scraped by on cash incomes of less than $1,000 a year. In 1970 The New York Times spoke of hunger as affecting the health of over 20 million people.

By 1976 the US Census Bureau estimated nearly 26 million people lived in families that were below the then poverty level of $5,500 a year for a family of four. The Census Bureau added that more Americans slid into poverty in 1975 than at any time since the government have been keeping records.

During the years since those to which these figures refer—and also for many years before—various governments, both at federal and state level, have introduced various welfare programmes to eradicate poverty, and failed hopelessly. Some of the politicians behind these plans may well have been well-meaning people, whereas others were certainly trying to win votes, but whichever, it is immaterial as society as it presently exists cannot eliminate poverty let alone provide everybody with a full and happy life.

So far the figures have applied only to the United States because, as the most advanced technological power, as the very heart and pulse beat of capitalism, all the most positive and negative aspects of capitalism appear there in their fullest contradiction. Contradiction it certainly is when the means exist to give everyone a full and happy life yet the vast majority struggle to make ends meet while a substantial minority live in want of the basic necessaries of life.

If this be true, as it is, of the United States, what then can be said of the rest of the world, particularly as the economy of so many countries is tied up with that of the United States? According to a 1982 United Nations report, every 2 seconds a child has to die of disease or lack of food, and if present trends continue there will be at least 600 million undernourished children by the year 2000.

The report written by James Grant, UN Children's Fund (UNICEF) Director, says that despite medical advances offering the opportunity for a revolution in child health, many of the children are worse off than they would haver been years ago. Measles, whooping cough, diphtheria, tetanus, polio and TB still kill some 5 million children world wide each year. Tetanus alone kills between 2,500 and 3,000 children a day. The report states that current projections show the proportion of the world's children who live without adequate food, water, health care and education staying about the same until 2000, but the absolute number will grow by 30 per cent to between 600 and 650 million.

Every day of the year, more than 40,000 children have died from malnutrition and infection, the report said. In recent years the percentage of child deaths due to hunger in African, Asian and Latin American countries has been increasing: "The quality of life has actually begun to fall as the economic foothold of their parents begins to crumble". The report went on to estimate that, excluding the cost of measures such as immunizing every child against killer diseases, a direct assault on the worst aspects of hunger and malnutrition would cost $6,000 million a year, "or one per cent of the world's annual expenditure on armaments"—a clear-cut example of capitalism's order of priorities.

World resources

Socialists have consistently maintained that the natural resources, technology and distributive capacity exist to feed, clothe and house the world's population many times over. This however, is impossible in an economic system where all production is geared to profit.

In reality nobody knows how big the earth's absolute supplies of raw materials are. No such investigations have been made. What has been investigated are supplies and resources that capitalism needs, and that is something very different.

In a recent interview in the Times Colonist of Victoria, British Columbia (May 13 1983) geologist Robin Folinsbee, of the University of Alberta, said that concern about dwindling fossil fuels was "greatly exaggerated" and that, besides, there were alternatives to fuels commonly used except that many of these would require too much investment at present to excavate.

About two-thirds of the energy released under present methods of splitting the atom in atomic power plants goes into waste heat—thermal pollution. Problems of coping with this waste heat have yet to be overcome, but the United States is planning floating nuclear reactors which would be used far offshore where the large volumes of water would not be affected by the warming. "Scientists are also working on ways to use the waste heat", Folinsbee says, "warm water created as a by-product might be harnessed to provide central heating for a whole city, then re-used when it had cooled. Then again the huge cost factor must be considered".

Further into the future scientists foresee that technology might utilize some of the sun's energy methods. Using laser beams they are finding ways of squeezing together several atoms with small atomic weights and of harnessing the heat energy given off by this fusion. Fusion of atoms is the opposite of the splitting of heavy atoms of the uranium type, but it also provides fantastic possibilities as an energy source. According to Folinsbee, "We've done it destructively with the hydrogen bomb. Now we must find ways to use it constructively". We would add that this is only one possible future source of energy. There are also proven safe renewable sources that could be developed.

Sir Derek Barton, professor of London's Imperial College, had already said when he visited British Columbia in 1977 that the world's problems of energy, pollution, hunger, overpopulation and the economy were all artificial or imaginary: "The energy crisis was entirely an artificial one, because it had been provoked by an international monopoly of oil-producing States which had arbitrarily and suddenly increased prices". (Vancouver Sun, October 31, 1977) Barton added that 70 to 80 per cent of the natural gas in the world is still to be found.

Deliberate waste

So destitution, starvation and deprivation do not exist because the capacity for producing and distributing wealth is insufficient. The technology to eliminate them does exist but is not applied under capitalism where all production is for profit and which also deliberately wastes and destroys resources.

In 1960 Vance Packard (certainly no Socialist) wrote a book called The Waste Makers which caused a minor disturbance at its publication because it dealt with what he termed "planned obsolescence". Packard showed how firms made shoddy goods, designed to wear out quickly so there would be a market for new ones. He wrote of radios, car parts, television sets which their designers and manufacturers knew could easily be made to last longer. There have even been instances of workers being fired because they took the time to do an excellent job, and so were not profitable.

Capitalism produces not for use but profit; so if wheat farmers, car makers, TV makers, appliance firms, heavy and light engineering companies can make more profit out of waste than by good quality products they will do so. But it is not enough to say that capitalism makes profits through waste. The fact is that the normal functioning of the system wastes an enormous amount of resources. Every year tons of foodstuffs are destroyed.

Wheat and coffee have been burned while millions starved. Fish are thrown back in the sea because the market was glutted (and capitalism is first and foremost a market system), and it was therefore not profitable to sell them. Potatoes have been dumped in order to maintain prices. In the United States several governments, both Republican and Democrat, have paid farmers not to grow wheat, in order to keep prices up.

It was recently reported that while the United States dairy herd is 57 per cent smaller than 40 years ago it is producing more milk (Western Producer, August 18, 1983). The result is a costly dairy surplus. Genetically improved cows and more efficient dairy farms have brought dramatic gains in milk output per cow. US milk production rose to a record 135.8 billion pounds for 1982. The US Department of Agriculture expects 1983 production to climb once again, probably reaching 139 billion pounds or 16 billion gallons of milk—enough to make a 7 million ton mountain of cheese.

At current levels of supply and demand, America's cows produce about 10 per cent more than enough to meet domestic and export market demand for milk, butter, cheese and ice cream. By law the federal government must purchase this surplus, and then incur the cost of storing and preserving these surplus stocks. This of course puts a drain on the federal budget, so the Reagan administration and the dairy industry are agreed on the need to cut milk production. Major milk industry organisations are advocating bonus payments for dairymen who cut their production and cash penalties for dairymen who increase production. On one thing all seem agreed: there must be no price cut, because that would "drive individual producers into increasing output as the only way to maintain their incomes when the price per gallon is reduced".

A similar situation exists in Canada regarding egg production. Here the National Farm Products Marketing Council oversees national marketing "plans" for poultry and eggs but since a market cannot be planned the industry is in a state of chaos. Meanwhile in the fruit and vegetable lands in British Columbia hundreds of cases of tomatoes were thrown away during the summer of 1983 because they could only have been sold at 70 to 80 per cent of what it cost the farmer to grow them.

When we speak of waste, it is not food and raw materials alone that are wasted under capitalism, but millions of workers who become unemployed during the various trade depressions and recessions which are another logical consequence of an illogical system. The devastating wars that are caused by the need of competing sections of the world capitalist class for markets and raw materials are still further proof, if any were needed, of the shocking waste of workers, especially when we consider there were more than 50 million casualties in the Second World War.

The logical insanity of capitalism

No one, whatever their political views, can examine these matters without being appalled at the logical insanity of capitalism. Logical, because these problems are a normal consequence of a society where all production is carried on only with a view to profit on the market. Insanity, because, surely to anyone in their right mind, it is insane that food should be destroyed when people are starving, that houses stand empty where people are homeless, that factories stand idle when workers are unemployed.

Years of tinkering with these problems by politicians, of all parties, well-meaning or not, has not achieved anything and in some instances matters have got worse. There is only one solution; which is for the world's workers to examine the contradictions of capitalism and then organise politically for a society where poverty, hunger, unemployment, pollution, waste, planned obsolescence, war and a host of things not even mentioned in this article will be a thing of the past.

Ray Rawlings (Canada)

"Old Nick" goes strictly legit

A Short Story from the April 1984 issue of the World Socialist

Nicolo Mephistophelio senior ("Old Nick") nervously fingered his neatly trimmed, gray, Beelzebub-type chin whiskers as he dropped into his luxurious easy chair at the head of the mahogany conference table. It was just 9 a.m. but he had been up some four hours already in order that he might tend to his religious duties, a daily practice with Nicolo from as far back as he could remember—from his childhood in Sicily, a long time ago since he was now in his 70s. He had breakfasted on his way home from mass and was free to relax for a brief spell before plunging into his busy, secular routine.

He was alone, for the moment, in this front room of his mansion atop the hill just inside the southern limits of the City in a swank neighborhood populated mainly by Yankee tycoons from the world of high finance. Nicolo relished the knowledge, gained from his bookish son Nicolo jr., a Senior at Harvard Business School, that these aristocratic neighbors—like himself—were descended from a line of highly questionable characters—in their cases slave traders. It made him, a Mafia Godfather, feel comfortable to be living—as he would jokingly put it to his close business associates—among his professional colleagues.

The spacious front room in which he sat, ostentatiously furnished and decorated with a mixture of modern American business slogans: GO GETTEM!, DO IT NOW!, etc., and pictures of American and Sicilian scenes and dignitaries, served as the head office of the Mephistophelio Family operations—an extensive network of legal, borderline, and strictly illegal businesses running from the processing and purveying of olive oil to the production and distribution of drugs-licit and illicit. His staff was by now in place in the various offices that were scattered throughout the mansion but no meetings were scheduled that morning in the conference room—none but the private session he awaited with his son, "Young Nick". Nicolo jr. was so-dubbed by those who knew him well because of his being thought of as a carbon copy of his father in the fiendishness of his business acumen. The strategy involved in the selection of Harvard Business School for this scion of the Mephistophelio Family was a polishing job that would add a distinguishable and brand new touch of suavity and respectability to this ancient Sicilian clan.

But "Old Nick", usually outwardly calm and collected, seemed greatly upset on this particular morning. He had been alternating his gaze between the pictures, charts, and business-oriented slogans on the walls and the breathtaking sweep of woodland park surrounding his mansion, a park that afforded him temporary escape from his business cares, astride his Arabian horse or putting golf balls on his private links. Finally, he might be seen—had anyone suddenly entered the room—arms on table cradling his head, in an attitude of fatigue—or dejection.

Whatever it was that bothered Nicolo's thoughts on this morning would not seem to have been related to his health. He appeared, for a man of his years, to be in fine shape. His rugged, five foot eleven inch frame and clear eyes almost suggested a much younger man—a man of this late 20th century, sophisticated, variety. Considering the dangers involved in the life of a Mafia Godfather—the threats against life and limb—"Old Nick" might well have been forgiven had he begun to reflect that the life of a Mafioso capitalist was no bed of roses, that it was time he retired to some Mediterranean island or other. But the racketeering way of life was bred in his bones and now he had a terrible worry eating at his vitals— the worry about his son's future, for he had begun to suspect, strongly, that something was going wrong with the Harvard strategy. Was his son who had been destined to take over control of the Mephistophelio empire planning on abandoning the ship—going legit?

Yes! It was ironical, he thought. He, the father, had been so proud that his son had been accepted into Harvard Business School and was on the verge of graduating. He had been trained by the cream of the legit economist crop and "Old Nick" had firmly believed that this fact would be of invaluable importance to the fortunes of the Mephistophelio operations. But now, as "Old Nick" awaited this meeting with his son, he just knew in his heart that he would get the message—and that it would be bad news for him. "Young Nick", influenced by his professors and by his society buddies at Harvard, would announce his official rejection of the Mafioso way of doing business. He would have been sold that bill of goods—that the Harvard way is the pinnacle of proper enterprise while the rackets were nothing but bad business. The liberal fraternity of Harvard must have gotten to him, perverted his way of thinking!

He heard his son's entrance and cheery "hello" and he snapped into alertness. The moment had arrived. "Old Nick" straightened his shoulders, resolved to summon every argument he could remember in defense of his heritage. He would concede nothing other than that aura of sophisticated respectability attached to Harvard; something he had already conceded when he had encouraged his son to enrol there. He was ready.

"Young Nick" was an athletically-built, dark featured, handsome enough fellow attired now in riding breeches, spurs, red blazer, cocked and plumed hat, and carrying a whip. He sat in a chair facing his father. "Yes, Papa," he spoke in a tone suggesting reverence, although not necessarily deference. "Young Nick" had arrived at an age at which he was certain that he knew much more than did his father about how society and the world were put together. And he was about to demonstrate to his own satisfaction, at least, that he certainly did. "Sorry about my delay" he said apologetically. "I was dressing for a chukker of polo—I've just been admitted to the Society at School. But I had something else on my mind so it took me a bit longer than I'd figured."

Ah yes! Something else on his mind, thought "Old Nick", but he managed a smile: "That's OK, Nicolo." He looked his son over approvingly. Although there was that fearsome worry attached, he felt a vicarious thrill at the acceptance of his son by High Society—and how much higher could one get in Society than Harvard Business School? His son was truly, now, in the same league as his aristocratic Yankee neighbours. True, some of the professors—he had been warned by Father Bulloni over at the Cathedral—were liberal do-gooders, even Communists or Communist dupes—to use an expression of his late hero, Senator Joseph McCarthy. There was that fellow Galbraith, for example: an advocate of socialism, Bolloni maintained and he, "Old Nick", had in fact listened to some of those TV and radio debates between Galbraith and Bill Buckley, the beloved defender of the Faith and of the American Way—which was not necessarily "Old Nick'"s way but which was certainly better than "Galbraith's socialism". But "Old Nick" had not imagined that his son would waste his time listening to the arguments of offbeat political reformers: not until recently had he suspected this. And the old man was now even beginning to fear that a type of mental illness that had afflicted his late wife some years back was beginning to disturb her son. He had even been compelled to have her incarcerated, for a time, where she had undergone electric shock treatment. He shot an anxious glance at "Young Nick"'s eyes as the memory gripped him momentarily. He recalled that it had not been easy to distinguish many of the inmates—when on visits to his wife—from mentally sound visitors.

He snapped out of his momentary reverie and reached for a parodi, an action that caused "Young Nick" to brace himself. The aroma from a previous, partially smoked stogie hung in the air and the son, knowing his father's infrequent smoking habit, sensed the old man's inward agitation. He had a strongly educated guess as to why this sudden session had been called; he knew that the time had come for a showdown, and he wasted no time in collecting his thoughts in order to be able to present his case as forcefully—yet with gentleness—as possible.

"Old Nick" lit up, blew a smoke ring or two, then looked his son squarely in the eye. "Yes, Nicolo, he said. "Polo is wonderful and there is no reason why you should not indulge in it although you should also spend time at the boccie games among our countrymen in the North End. We must not divorce ourselves altogether from our Old Culture in our social life. But now I want to talk to you about something much more important. You must realize, of course, that I want you to become the Numero Uno of all of my enterprises and you can take over immediately after your graduation—that will be your graduation present. Of course it will take some time before you really catch on to how everything should be done but I will still be around to help you and to give you good advice. I'll be in the backghround, like those old retired professors at your college—those emeritus people, you call them don't you? And everybody will know and will give you the respect and the honor that they should give you. With your college background and your financial power you can even make it big in politics some day!"

The die was finally cast! The old man had gotten it out and now he sat silently, puffing on his parodi, awaiting his son's response with ill-concealed tenseness.

"Young Nick" was silent for a moment, mentally polishing his approach. Finally, "Papa," he said respectfully, speaking slowly and with just a trace of nervousness showing, "I, too, have wanted to discuss my future with you for some time now. I've been putting it off but now it is time to tell you about my plans. I'm going to establish my own business and it is going to be a strictly legit operation. I'm going into food processing—from antipastos to spumoni with every known variety of pasta and sauce—maybe even some that are not known, entirely new ones. I'm going to make the Mephistophelio name famous instead of infamous. I'm going to be regarded as a public benefactor because I'm going to provide plenty of jobs at wages—I'll be thought of as a pillar of society and of the Church . . ."

It had come; his fears were well taken; the respectable do-gooders had gotten to his son. "Old Nick" was out of his chair in a flash, one hand raised with index finger wagging. "Look here, my boy, I too am a pillar of society and of the Church and a public benefactor. I provide plenty of jobs at wages, I make generous donations to the Church and to all sorts of Charities ..." He was flushed and "Young Nick" became nervous.

"Papa, your blood pressure. Remember your doctor warned you to keep away from tense situations. Relax, please, and let me explain why I think the rackets make no sense." The old man sat down and tried to calm down, resolving to hear his son out but with a mixture of puzzlement and worry in his expression. "Go ahead, Nicolo, explain to me why the empire that I and my father and grandfather built makes no sense, why all of this" he waved his hand to indicate the mansion and the estate, in general, "why all of this makes no sense."

"Young Nick" was by now forced into making a fast mental decision. His father's few words spoken thus far underlined the importance to the economy of Organized Crime and even the wide social acceptance, by respectable elements, of prominent and powerful crime figures such as his father. How could he forget the extravagant parties that his father had sponsored, on occasion, at which many of the most prominent and influential representatives from the world of politics, entertainment and Society were honoured to attend? He must scrap that part of his argument and get down to the meat—the substance.

"Papa," he said, "the fact is that the rackets make no sense because legit operation gives you everything you can make actually gratis—at least in the long run. And the most beautiful part of it all is that the very people who are producing all of this legit wealth for you and making you a present of it—these same employees regard you as a public benefactor because you are giving them the chance to do this for you. All they ask is that you pay them enough to make a living. . ."

"Old Nick" was really visibly shaken by now. He noted the crafty glint in his son's eye but mistook it for incipient insanity. "Nicolo," he said soothingly, "you've been studying too hard lately—hitting the books, like you call it. I know that too much of that college stuff, crammed into your head, can be bad for you mentally." In fact, "Old Nick" had even heard of cases of college students committing suicide because of pressure of their studies and he became genuinely worried. "Nicolo," he urged, pleadingly, "you'd better take a few days off before those final exams—forget the books, relax completely. Why don't you take some of those society sweethearts of yours up to the mountains?"

"Young Nick" smiled broadly. "Papa, I know that I must sound to you like I'm losing my marbles. But please hear me out. You know as much about legit enterprise as the average business man—after all, you do run all sorts of respectable businesses along with the racketeering. But like just about all businessmen you think that your profits come from your ability to take advantage of your competitors and the people you buy your merchandise from and those you sell it to. That helps, of course, but it really doesn't explain anything because those people, those other business people you deal with are taking it away from you as fast as you take it from them—or, if not from you, then from others. All that is happening is a continual redistribution of all of that wealth that is out there. . ."

"Old Nick" shrugged his shoulders, leaned back in his chair and watched his son with narrowing eyes. He would hear him out before coming to any decision on what to try to do with him. He could not restrain himself, however, from blurting out one question that was now eating at his vitals: "Do you mean to tell me that they are teaching you that kind of Communist garbage at Harvard Business School? Am I giving them my good dough to fill your head with that nonsense?"

"Young Nick" laughed. "Of course not, Papa. You can't run businesses on that brand of economics. They don't even make too much out of it in the Communist countries although it doesn't seem to hurt any that some of the top executives may very well understand the process. No. I didn't get my understanding from Harvard. I got it on my own by studying the kind of texts my professors either put down or mention only in passing." He paused for a moment to make certain that the old man was reasonably calm—in a mood to pay attention to what he was about to say. "Old Nick" was not smiling but he did wave his son on.

"Go ahead, Nicolo," he said, "explain how the legit operators get everything gratis; how their raw materials, plant space, machinery, taxes, insurances, cost them zilch. And the wages we pay out. How can you say that is not a cost to us?"

"Look, Papa," "Young Nick" spoke slowly, stressing his words, "of course you have to lay out dough for wages. But that money comes from a fund provided by the sale of what your workers have already produced. It's a continuous process once the operation has been founded and the workers are actually producing the money that you use to pay them the wages that you pay them.They've got to or you wouldn't keep them long, would you?" He looked sharply at his father's expression and he seemed to detect an alteration in it—a glimmer of understanding, he hoped.

"And not only that, Papa," "Young Nick" went on, "neither you nor any other business man is in business simply because most people must have jobs at wages in order to live. Of course if it wasn't for that fact you couldn't be in business, to begin with but your object can't be simply to provide jobs for working people. You have to pay all of your expenses of operation and you have go have a good margin left over to enjoy life, too. So those workers of yours have to produce a value far greater than what they get from their wages. . ."

The old man shifted uneasily in his chair. "And you mean to tell me, Nicolo, that my brains and abilities have nothing to do with it? That all those long hours that I put in are of no importance?"

"Of course what you do is important," "Young Nick" assured him. "But what you do has to do with protecting your interests, not in creating your wealth. And anyway, you're big enough now to be able to hire the best brains that Harvard turns out to look after your interests. The point that I'm trying to make though, is that the rackets make no sense because all those people out there who work jobs at wages in order to live and raise their families are making you an offer that you just can't sensibly refuse."

The old man sat silent, obviously mulling it all over. "Young Nick" then administered his coup de grace: "Look, Papa," he said, "let me give you an analogy. Supposing we were to make an offer like this to any of those workers nervousness you or who will work for me. Let's say that we offer to take his shiny, new car  to use in our business. We use it for eight hours each working day, we provide the gas, oil, and maintenance to keep it operating efficiently for us; letting its owner have it after working hours, even giving him enough to run it during his leisure hours. You know that he wouldn't go for a deal like that. Not with his car you can be sure. But he does it with himself and he's convinced that there's nothing else he could do and that this is how it's supposed to be. . . With all of the talk about socialism and communism in more than half of the world that's the way things operate in those countries, too. The goverments might be the legal owners but the basics are the same the world over. The legit operators—private like here or bureaucratic wheeler-dealers like in the Communiutst countries—have it made. It just doesn't make sense to get involved with the rackets when you've got a deal like that. It's an offer I can't refuse."

He had been watching his old man's face carefully while he was making his pitch. He could see the conflicting emotions as "Old Nick" seemed to be assimilating the message; he could almost see the wheels in his father's head turning. "Young Nick" sensed that he had made a sale. "Old Nick" smiled his most devilish smile. He stood up and seized his son's hand. "Nicolo," he boomed: "You're on! I'm going to go all-out legit. You want a partner in your Mephistophelio Pasta Company?"

Harry Morrison (USA.)

The Inseparables — War and Capitalism

Cover art by George Meddemmen.

From the April 1984 issue of the World Socialist

When the late President Yuri V. Andropov of the Soviet Union invited an 11-year-old American schoolgirl to visit the USSR after she had written to him in the spring of 1983 asking if he would “vote to have a war or not", even the most gullible might suspect a propaganda ploy, this one somewhat reminiscent of former President Carter's publicized encounters with the perplexed youth of America, including on one occasion his own daughter.

Andropov's guest claimed that if they were to ever meet, she would ask him: “Do you promise me the Soviet Union will never start a war?"

"The Americans are not going to start a war, either. So why are we still making all these bombs and pointing them at each other?"

Certainly there is nothing wrong with children confronting the supporters of American and Russian capitalism with such probing, pertinent questions—but where are the answers? Also, it might be construed as indicative of a somewhat strained, parlous political relationship existing between the two major powers when such publicity tactics are used, which inveigle the innocent into the quagmire of deception and international intrigue, related to matters of war.

The socialist position regarding war holds that, (1) Capitalism is the cause of war in the modem world. (2) Wars are inevitable under capitalism and the conditions that give rise to them are inherent within the system, and (3) All wars are fought over the interests of the capitalist class and we are unutterably opposed to ail of them without reservations of any kind.

While politicians throughout the world all claim to seek peace, abhor war and lament their occurrence, their reformist policies fail abysmally in securing their professed objective. War is rampant on a global scale. According to a survey conducted by the US News & World Report, July 11, 1983, 40 countries are presently involved in hostilities that have claimed as many as 5 million lives.

These conflicts are prosecuted with so-called conventional weapons forming an inescapable continuous pattern of human destruction. True, wars preceded capitalism, but war in the current era is the result of the private property relationships of the existing order of society and the causes of war are tied to the economics of capitalism. These forces are beyond the control of parties leaders and “United Nations", otherwise wars would not materialize—virtually on a day-to-day basis.

Policies and negotiations between the various capitalist states attempt, in most instances to avoid war if this is at all possible and to only regard them as a last resort should all else fail. The continuous proliferation of war proves beyond reasonable doubt that all efforts to prevent war within capitalism are doomed to fail.

Since the advent of the atomic bomb, towards the end of World War Two, the major powers have indulged in a massive and unceasing arms build-up that has stockpiled nuclear weapons, based upon the philosophy of either mutual deterrence or a potential first strike capability. I suggest these two alternatives because the actual intentions of governments, and the specifics of their negotiations, are always shrouded in secrecy—we are by no means living in an open society. Therefore, it is quite conceivable that governments have under consideration, from time to time, the practicality of exercising a nuclear "first strike" should they evaluate the overall circumstances to assure them a "victory" that would offset contemplated losses. This occurred when the US made their pre-emptive, atomic attack against Japan.

Preparations for war therefore, or for speculative avoidance of war, have been divided between the two arsenals of so-called conventional weaponry and those of the thermo-nuclear variety. To date, conventional warfare has prevailed and the dreaded holocaust avoided, although Hiroshima and Nagasaki could be regarded as full-dress rehearsals in miniscule form of what the future might have to hold. War, consequently, has not been avoided only total human annihilation — so far, that is!

There is, most unfortunately, an ominous fallacy in the approach to the problems of war in general and the potential nuclear horror in particular, that is pervasive in the thinking of all those who support the continuation of the present system, especially among the politicians and reformist parties that strive for viable solutions. Their energies are directed along technological, strategical and militaristic lines whereas the problem is one deep-rooted within the economics of capitalism. Wars originate from social factors that are the outcome of the manner in which a given society conducts its affairs and they require a social solution not a technological one.

Preparation for war, or armament build-ups claiming lo be "defense" measures that will preclude war, or negotiations between powers on specific nuclear devices and their geographic placements or curtailments, or "freeze" programmes, or the unending debates on various types of nuclear devices, or the pros and cons of conventional weaponry as compared to nuclear, germ and chemical monstrosities, or so-called super-weapons, or satellites in space, or a lawful mutual “spy" system, are all measures that do not in any way come to grips with the core of the situation. They are primarily technological approaches to war. but what is needed is a social solution to a social problem—all else is futility, fraught with terrible danger lo mankind and unnecessary procrastination particularly when a practical solution awaits recognition.

Governments can never be expected to research solutions that will in any way threaten either their status or the system that they are appointed to protect and upheld. They therefore have no real alternative but to proceed along the technological courses that produce the bottomless pits of a never-ending arms build-up.

President Reagan in his "Star Wars" speech of March 23.1983. proposed the development of space-based missile-defense systems that would have the capability of destroying enemy missiles in flight. With euphoric rhetoric he urged: “Let us turn to the very strengths n technology that spawned our great industrial base, and that have given us the quality ol life we enjoy today". This "quality of life" it should be remembered embraces the wars, not to mention the numerous other social problems.

Herein lies the terrible danger of the duly elected leaders' seemingly, but not in actuality. oblivious to the real economic causes of war, offering their impotent remedies and receiving political acquiescence from their supporters, allowing the madness of the present system to continue.

The late Russian leader, Ardropov, whose alma mater was the notorious KGB, responded to Reagan's anti-missile plans as an “insane" and "extremely perilous" strategy aimed at rendering the Soviet Union helpless to US nuclear attack. Simon Ramo, one of the developers of the inter-continental ballistic missile, asked: Who says that this technique will be used only to knock out missiles in the sky? If it's such a good technique, why not use it to knock out things on the ground?” (Quoted in Los Angeles Times, supplement on the Military-Industrial Complex, July 10, 1983.)

In other words, just because a government describes its weaponry as "defensive" it invariably is regarded as quite the opposite by its opponents. Reagan’s proposal, in fact, was just another rehash of the old delusion that a supreme weapon can be discovered that will intimidate, subdue or conquer the enemy. However, "supreme weapons” in due course have a way of being duplicated, circumvented or eventually surpassed.

Reformist attitudes to war have not prevented stockpiles of nuclear and allied weapons of gigantic proportions that continue to grow incessantly. In addition to the major countries that already possess nuclear arms, Argentina, Brazil. Pakistan. Israel and South Africa top the list of potential new nuclear powers— perhaps already having the actual capability. The United States in May 1983 was reported to have 2,011 intercontinental missiles and bombers with 9,681 warheads; the Soviet Union 2,480 of these “strategic launchers", with 8,781 warheads. [Arizona Daily Star, May 13, 1983) The same Associated Press report staled that the United Slates plans to deploy 464 ground-launched cruise missiles and 108 Pershing 2 ballistic missiles in Western Europe. The Soviets have a similar number of SS-20s and other medium-range missiles, all but 100 or so within striking distance of Western Europe.

The US News & World Report in an article dated December 6, 1982 stated that six nations have nearly 43.000 atomic weapons—the US, Russia, Britain, France, China and India. The Report further states that “Scientists estimate that if all the nuclear weapons in the world were detonated, the force would equal 10 trillion tons of nuclear explosive power."

Has saturation point been reached? By no means, for on July 13, 1983 the US Senate authorized $130 million for the production o' a new generation of nerve-gas bombs and artillery shells. At the same time the Senate was working on a bill that would authorize $4.5 billion for development and production of the MX which is the latest intercontinental ballistic missile proposed for the US arsenal. Another provision of the bill is for the construction of the B-1 bomber at a cost of $6.2 billion. And so it goes on.

The Los Angeles Times on July 10. 1983 published a 16 page supplement entitled “Servants or Masters? Revisiting the Military-Industrial Complex", on which a team of reporters and editors had worked for four months. The report refers to President Reagan's plans for an unprecedented five-year, $1.8 trillion expansion of defense spending. It states that more than 30 per cent of the country’s mathematicians work somewhere in the military-industrial complex, along with 25 per cent of the country’s physicists, 47 per cent of aero-astronautic engineers and 11 per cent of the computer programmers. Referring to California the report claims that one of every eight Californians with a job works, directly or indirectly for the military-industrial complex.

If one takes into consideration the millions of men and women employed in the production of armaments and allied occupations, it would be reasonable to suppose that n order to protect their jobs workers would be sorely tempted to rationalise political support for the arms build-up, until of course such times as they acquire a genuine, socialist opposition to a system that not only economically enslaves them but subtly entraps them into producing instruments of human destruction.

The dreadful tragedy of current wars, together with the awesome possibility of worse things to come, will not be removed by reformism, vacuous protests or dependence upon armed might, governments or leaders. The working class have a formidable task confronting them of self-education towards the scientific grasp of their problems. They alone hold the key to the future and each ore of us has a part to play in the process

When artificial borders between countries no longer exist, when the sole purpose of production and distribution is to satisfy the needs of humanity with no concern for profit, trade or barter, when classes have vanished because each person owns in common with their fellows the means for producing and distributing wealth with free unfettered access to ail goods and services, all of the conditions that cause war will have been finally and irrevocably removed. 

Furnaces throughout the world will become the recipients of a colossal amount of scrap metal—a fitting tribute to the long-awaited commencement of social sanity.

Samuel Leight (USA.)

How socialism can increase food production

From the April 1984 issue of the World Socialist

The statistics which arise persistently throughout the world from the problem of malnourishment and starvation, exceed all other measures of death and misery. Yet whilst this is the problem from which humanity in 1984 suffers most, the solution to it in socialism would be straightforward, taking relatively little time.

World capitalism can enter up on the debit side of human suffering hundreds of millions of dead from lack of food. Despite the abundance of labour, technique and productive resources, the absolute numbers of men, women and children dying from lack of food are greater than ever before. The UN Food and Agriculture Organisation state that in 1974/5 a conservative world estimate of seriously undernourished people was 435 million. This was 75 million higher than 5 years previously. UNICEF state that 40,000 children are dying every day from starvation or malnutrition related-disease, or annually around 15 million.

Malnourishment is not only a problem of "underdeveloped" countries. Within the EEC, 30 million workers are living below the poverty line, which means living on less than half the average income for those countries. This results in impoverished diets, a reliance on cereals, starchy root vegetables and sugar. The London Times reported in July 1983 that "Thirty-two million of the (American) population of 233 million are graded as below the poverty line, but the mayors say that soup kitchens are not keeping pace with the hungry". The London Sunday Times reported in August 1983 that some pregnant women in Hackney, London, were consuming only 1,613 calories per day during the first 3 months of pregnancy as against their needs of at least 2,100 calories. The FAO definition of "seriously undernourished" is a calorie intake of 1,600 calories per day and less.

Malnourishment exists in every country of the world because under world capitalist production, food is produced as commodities for sale at a profit on the market. Food production is not organised directly for human needs, it is geared to market capacity where profit is realised. To support the market the EEC destroys food every year, and maintains a policy of restricted food production. In 1982, American farmers took 82 million acres out of food production.

HUMAN NEEDS AND SOCIALIST ACTION

A great deal of discussion about socialism centres on how needs will be determined in the absence of markets, money and prices. How will decisions be made about production? Needs are socially given by the nature of existing problems. The objective of socialism is to organise society directly for human needs and therefore support for socialism must be on the basis that we take over the means of production and resources, and then concentrate the priorities of social action on the areas of greatest human need.

This element of material necessity is a pressure on what social ism is bound to do. This existing material position pre-empts the important social policies of socialism and these policies are not therefore subject to arbitrary choice. The socialist movement is bound to formulate its programmes of action for dealing with problems in advance of the capture of political control and foremost amongst these actions will be the increase of food production from the present artificial scarcity in relation to sufficiency for human need.

This is not to suggest that every option open to world socialism for increasing food production is determined mechanically by the pressure of necessity. The socialist movement is committed now to the overall policy of increasing food production within socialism, but within this overall policy of action, the need for particular democratic decisions will arise.

DECISION-MAKING

The organisation of the production of food must be considered together with the social procedures for decision-making. The working class organised for world socialism, acting consciously and politically, will take over the various State machines of capitalist governments and immediately adapt these structures for the purposes of useful world administration. This will mean the capture of the machinery of government at the various local and national levels, and the conversion of these State instruments of government into local and regional councils, with the present United Nations Organisation providing a ready-to-hand administrative facility for a world council.

Centralised State control is hostile to democracy. The present position whereby governments impose their decisions on the wider population will have to be replaced by a system of decision-making and action where the decisions flow from the broadest social base to make up the democratic view of the community. This is the reverse of the present system of centralised state control, and it is what is meant in the socialist object by "democratic control . . . by and in the interests of the whole community".

In practice, this means that the basic unit of social organisation, and therefore of decision-making will be the local community. The local community will elect its delegates to the local council, and these persons will be delegated the responsibility of local administration. One procedure could be that these members of the local councils could elect, from amongst their numbers, delegates to the regional council. If this procedure were to be adopted then it would follow that the regional council would elect from amongst its numbers, delegates to the world council.

This system of electing delegates to the various councils would have to include machinery whereby these councils could be instructed by poll. On an everyday basis, matters could be left to these delegates and provided that the numbers were enough they would reflect general opinion. But circumstances could arise where these various councils would want to ascertain precisely the view of the whole community on specific issues. The same machinery could be used to challenge a council decision.

The poll of the community would be the final arbiter on all social issues requiring a social decision. On this basis we would have a system whereby local communities would instruct their local councils, the sum of local council opinion would instruct the regional council, and the sum of regional council opinion would instruct the world council.

SPHERES OF DECISION-MAKING ABOUT PRODUCTION

The three spheres of decision-making, local, regional and world, are an adaptation of existing structures; they also coincide with the different scales on which production is required to be organised.

We need local agriculture, and the local work of producing useful goods according to local needs and work preferences. We also need local services. Also we need world bodies, mainly for the organisation of the extractive industries such as oil and metals, and then world transport, world communications, control of space, energy supply etc.

Between the local and world scales, regional organisation will be required. This would be particularly for the manufacture of component parts and assembly of goods and equipment. Tractors, for instance, would be produced regionally and distributed to the various localities covered by that region.

Democratic decision-making must be integrated with the organisation of production in the local, regional and world spheres, and applied as a priority to the need to increase food production. We can envisage ways in which firstly, local communities can increase food production; secondly how this local food production extends to regional manufacture, and thirdly how this also extends to world productive organisation.

LOCAL FOOD PRODUCTION

To overcome the problem of scarcity of food on a world scale we estimate on the basis of all the available evidence that socialist society will have to increase food production by at least 60% as a short-term target.

The production of the great variety of vegetables, salad crops, fruits, oil seeds, spices, animal produce, fish farming etc., could be organised on a local basis. In local communities, the knowledge and unique experience of working particular soils exists. Those individuals with this experience would be given the assistance required to organise the ways in which local food production could be increased. In its first period, the greatest advantage that socialism would enjoy would be the availability of extra labour, which would be released as a result of the ending of the useless functions associated now with the running of capitalism. With the availability of all the people at present engaged in insurance, finance, banking, commerce and competition, plus the present labour wasted in armed forces and armaments production, the state bureaucracies and the millions of unemployed, socialism would be able to at least double the numbers of people available for useful production throughout the world.

By immediately concentrating greater numbers of people on the work of increased local food production results could be quickly achieved, especially with labour intense methods of cultivation. In the short term this would be appropriate, since the work of providing more mechanised equipment would take time.

FOOD PRODUCTION AND REGIONAL MANUFACTURE: AN EXAMPLE

Having emphasised that socialism could quickly increase local food production by more people getting on with this work, at the same time, regional manufacture would also be applied to this priority of production. A great advantage to local food production in the temperate climates would be the use of greenhouses. By this method it is possible to more closely control the conditions of cultivation, extend the season of growth, and diversify the crops. In response to the desirability of local food production for local consumption, local communities would want to construct greenhouses. But obviously, not every local community would have its own glass-works. Glass would be produced on the regional scale of manufacture, and we assume that the existing glass production facilities, taken over by socialism, would be under great initial pressure to supply glass.

Arising from this position of a widespread requirement for glass, decisions will be called for. Once durable greenhouses are in place in local communities they will be available for use over a very long time. Production for need, in the position of inherited scarcity is a pressure to produce, but it also embodies a limit to production. At a certain point local communities have sufficient greenhouses for their purposes.

In response to this very high peak of initial requirements, the region could increase the means of production, that is, build more glass works to increase the productive capacity. But as a prudent society, socialism will not want to create massive over-capacity. This would be increased production facilities set up to cope with the high peak of initial requirements but then soon becoming redundant. This has to be set against the consequences of not increasing productive capacity, which would be that the high peak of initial requirements would take longer to supply. Getting the balance of this right would be one of the decisions which would have to be made.

In socialism, since this matter would involve regional production facilities, it would come within the framework of decision-making of the regional council. Those who have taken on the responsibility of running the regional glass works would put all the relevant information in front of the regional council together with the various options which arise from that information. On this basis and in consideration with possible information from any other relevant source, the regional council would make a decision, bearing in mind that the regional council will be made up from delegates from all the local communities of that region.

This example of glass production is one of how a social priority, the need for more food, extends from local organisation to regional organisation, and also how food production extends to manufacture.

The work of setting up local greenhouse cultivation would extend to regional manufacture but it would also extend to organisation of production on a world scale. Greenhouse structures require rigid supports. Socialism would be unlikely to use timber. It is not a durable material, it would require a lot of maintenance, and moreover, socialism has to plant trees not cut them down.

A metal such as a durable alloy could be used, and also suitable would be plastic. Plastic is a product of oil extraction, and this would be organised by a world body. Obviously the regional facilities for converting oil into oil products already exist, but we are bound to have a world oil body monitoring the process of extraction and use in relation to the reserves of the material.

Demand for oil products would flow from many needs. A particularly important use of oil will be with plastic water pipes, arising from the need to supply piped clean water to the entire world's population. Working with the world council, and in association with other world bodies, the world oil body would have to assess how best this material could be used in respect of the wide range of initial needs, and also in respect of other possible solutions.

The sequence of productive activities we are describing is initiated as a response to needs in local communities, and as with such items of food production equipment as tractors, flows through regional manufacture of components and assembly, and then to the supply of basic materials from the extractive industries organised on a world scale.

WORLD CEREAL PRODUCTION

Whilst the great variety of foods included in vegetables, fruits, salad crops, oil seeds, spices, animal produce, fish farming, etc., are most suitable for local production for local consumption, the basis of agriculture is cereal production. In response to the urgent need to increase world cereal production, socialism is bound to take a world view of the problem. The present world bodies which could be adapted for useful organisation are the UN Food and Agriculture Organisation and the International Wheat Council.

With the continuation of world capitalism, it is accepted by the FAO that no remotely feasible rate of economic growth could eliminate serious undernourishment in the forseeable future. The FAO have predicted that a continuation of a 2.8% increase in agricultural production given for 1977 (it is lower than this now) will result in an increase in the numbers of seriously undernourished from 435 million to 590 million in the year 2000 with the position rapidly worsening into the 21st century.

These projections assume an increase in the world's population from the present 4,415 million to 6,199 million during the sixteen years between now and the year 2000. It must be emphasised here that the cause of the problem of world hunger and malnutrition is not one of numbers of people in the world. The problem is entirely the result of the motive of capitalist production—profit, and the operation of the world capitalist market, and cannot be understood by an alleged imbalance between numbers of population, availability of labour, technique and productive resources.

The International Wheat Council monitors the world production of cereals or grains. Their work is aimed towards achieving a balance between world production of grains and market capacity so that wide fluctuations in the world market prices can be averted. In its present work, the International Wheat Council is not the least interested in human needs except as they are expressed as market capacity. As with the FAO, the forward projections of the International Wheat Council about world grains production and market capacity are equally pessimistic in respect of satisfying human needs.

In 1980 world production of all grains was 1.45 billion tonnes. This was an average per person of the world population of 329 kilograms for all grain uses.

The projected figures for the next sixteen years to the year 2000 for world grain production given by the Council are 2.177 billion tonnes, which with assumed population increases, will amount to a total grain use of 357 kilograms per person.

Not all grain use is that of direct consumption. Of the average per capita consumption of grains in 1980 of 329 kilograms, 162 kilograms was directly consumed, and the remaining 167 kilograms was used as animal feeds, brewing, etc. Behind these figures for average world total grains consumption exist wide differences of real individual consumption. These differences range from 203 kilograms per person in the "developing countries" to an average of 588 kilograms per person in the countries of Western Europe, USA, Canada and Australia.

However, again within these populations, different levels of consumption apply as a result of class differences and the different positions of individual workers. On existing patterns of food consumption, determined by individual access to the market, and the limitations of that access according to relative poverty so far as workers are concerned, the present world production for a world market of approximately 1.6 billion tonnes, forms the background against which 30 million people die every year from lack of food.

Whilst forward projections of the operation of the world capitalist market are subject to many unpredictable variables the projections of current market trends put out to the year 2000 by the International Wheat Council is one which must assume over 500 million deaths from lack of food over the next 16 years.

The standard of food consumption which is average in Western Europe and North America is based upon a total grain use of 588 kilograms per person per year. (With 138 kilograms being used directly as food, and the remaining 450 kilograms being used for animal feeds and all other uses.)

On these existing patterns of food consumption, and to bring every individual on the planet up to the standard of food consumption which is average in Western Europe and America, socialism would need to increase world grains production from the present 1.6 billion tonnes, which is world market capacity, to 2.6 billion tonnes for human needs on present world population numbers. For a world population of 6,000 million, projected for the year 2000, socialism would need to produce 3.6 billion tonnes of grains for human need, as against the projected 2.2 billion tonnes for market capacity.

With socialism, the Food and Agriculture Organisation, working in cooperation with the world and regional councils, would be responsible for coordinating this work of increasing world grains production as an urgent priority of action. There is no shortage of potential productive land, though the necessary work of preparing this land for cultivation may take some time. Irrigation schemes, for example, would require the FAO to cooperate with other world specialist bodies as world wide cooperation was swung behind the concerted effort to deal with hunger and malnourishment. A great deal could be accomplished in the short term with improvement of storage facilities and safe control of pests and disease.

TIME SCALE FOR SOCIALIST SOLUTIONS

With a more equal distribution of inherited scarce supplies of food, together with a more efficient use of these supplies in terms of nutritional values, socialism could stop people dying from hunger immediately. This would be the immediate measure that world wide socialist cooperation would implement.

Alongside this more equal and efficient use of scarcity, local initiatives would be of crucial importance. Local democratic action could be concentrated on increased local production with more people using existing land resources for more intensive production. This would be the most immediate way of increasing production, and the main thrust of socialist action could centre on these local initiatives, and upon the results of this would depend how far socialism would progress towards sufficient supply. However there can be no doubt that within a period of up to 5 years these local initiatives would transform the position.

Together with these measures at the local level, the FAO as a world agency could organise aid and assistance for those areas of the world where the means of agricultural production are underdeveloped. The work of bringing more productive resources into cultivation presents itself mainly as the irrigation of semi-arid soils. With world cooperation and concentration of action on this priority, socialism could reduce the time usually taken to complete irrigation schemes, when they are undertaken under world capitalism within the constraints of the market system. Socialism could count on bringing in extra land for cultivation, even for the most elaborate of irrigation schemes in something like ten years.

COMMUNICATION OF NEEDS TO PRODUCTION AS A WHOLE

At the present time of world depression, the economic signals sent to production units within the world market system are substantially those which indicate stoppage of production. This applies to world cereal production. Using information put out by the International Wheat Council, the United States government in 1983 agreed with farmers that they should take 82 million acres out of food production, which is approximately 100 million tonnes of grains forgone, as a result of the operation of the market. Self evidently this is in reverse of the direction that we need to go to provide for human needs.

With production for use the indications to production are those of need, not market capacity and profit. Production for use will operate as a sequence of productive activities, arising as a response to need in local communities and extending to different scales of production in accordance with necessity and practicality. Needs will be communicated as quantities of things in line with social priorities, and will pass through as applications of different labour to all the necessary sequences of productive activity in the local, regional and world spheres. In the first instance needs are an indication to produce, but they also define the limits to necessary production.

Socialism will take over from capitalism an existing structure of production and this will be the material basis from which the development of socialism will begin. Initially this will take the form of the adaptation and expansion of the useful elements of existing production. To begin with, the socialist community will impose its priorities of need on this existing structure.

This will be an essentially self-regulating system whereby the usefulness and therefore the continued part played by any element of production will be determined by the factor of need, expressed as quantities of things, and passing through all the interdependent parts of production as a whole. Each particular part of production will be responding to the particular demands placed upon it. It is a system which is self-adjusting over time on the basis of experience. Each part of production will know what its position is in relation to this demand of need. If stocks accumulate, then this will require the adjustment of reduced production and if there is a time delay in supply, then this, self evidently, will require increased production.

OVER-PRODUCTION

In respect of so-called overproduction there is one difference between production for the market and production for use, which has an important bearing on organisation. If a part of capitalist production overproduces for its particular market this generally results in crisis which can lead to depression. There is overproduction of world grains in relation to the market and this has resulted in 82 million acres being taken out of production in America. The farmers who would otherwise have been producing on these millions of acres, would also otherwise have been in the market themselves for their own particular supplies. They would have stopped buying these supplies and in this way the chain of stopped production spirals down to other parts of production.

Whereas overproduction for the market is a problem for world capitalism, overproduction for human need in socialism would be a positive advantage. In respect of the world availability of basic materials, production for use could aim to stockpile supplies of these in excess of immediate demands. Whilst there would be no point in going on and on stockpiling greater reserve supplies, nevertheless current production could aim to top up the reserves of basic materials, as they were distributed for consumption to every region and local community throughout the world.

With a well developed world storage system socialism would stockpile a reserve supply of grains in excess of the needs of current consumption. Given such storage facilities, grains are durable, and easily transported in bulk without damage.

SOCIALISM—AN ADAPTABLE SYSTEM

Production for use and democratic control is adaptable. Different productive activities can be organised in different ways according to practicality and according to the importance of the activity as it affects the whole community. All sorts of spontaneous activities could arise in different local communities between enthusiastic individuals. At the same time it will be necessary to take a world view of cereal production, the use of finite materials such as oil, and metals, and also a world energy system.

For these reasons, the organisation of production for use must be adaptable within a world which is integrated, with the basic unit of social organisation being the local community.

Within this integrated system we have the facility of organisation for any need or purpose. It can provide for the spontaneous initiatives of individuals or small groups, and at the same time it can deal with the important problems where society as a whole needs to take a larger scale and more long term view. The anarchy of current world food production shows the urgency of a new system now.

Pieter Lawrence (Britain)

The economic crisis—the Marxian explanation

From the April 1984 issue of the World Socialist

At the present time world capitalism is in depression. Throughout the world there are millions of unemployed. So it is important to know why this depression is happening, whether or not it could have been avoided. Will it pass away, and if so, when? Will depressions happen again in the future?

We hold that depressions are inevitable under capitalism, and that no reformist policies based on Monetarism or Keynesianism, or anything else, will make any difference. We agree with Karl Marx that capitalism and depressions go together and that the only way to get rid of depressions is to replace capitalism with socialism.

CAPITALISM'S TRADE CYCLES

"Capitalist production moves through certain periodical cycles, it moves through a state of quiescence, growing animation, prosperity, over trade, crisis and stagnation" (Marx, Value, Price and Profit)

Nowadays we would use the word "boom" where Marx used "prosperity" and "depression" where Marx used the word "stagnation", but these terms mean exactly the same thing. The cycles are not tidy and regular like the movement of a clock. It is not possible to say how long will be the period between the end of one depression and the arrival of the next crisis, and it is not possible to say how long a depression will last. Some depressions have been quite short, but what was known as the Great Depression in the last quarter of the 19th century lasted for twenty years. There were ripples of partial recovery during this long period which faded out.

It seems safe to accept, as did Marx, that the period of prosperity, or boom, never lasts for long. Marx put it that boom conditions are the harbinger of a coming crisis, but the Keynesians and the Monetarists believe that they have discovered a way in which governments can make the boom permanent.

Marx did not use the term "crisis" to mean the same as "depression". The crisis is the sudden break which brings the boom to an end, the depression is the decline of production and increase of unemployment which comes after the crisis. It is important to recognise the difference between these two stages of the trade cycle, because the factors which govern the period up to the crisis and the crisis itself, are different to the factors which operate during the period of depression.

The state of quiescence, as Marx called it, is the period towards the end of the depression when production has ceased to fall and when unemployment has ceased to grow, when things are moving along a fairly even but low level. We seem to have been in a period of "quiescence" for the last year or year and a half; in other words, unemployment having increased fairly rapidly about two or three years ago, and production having fallen sharply, in the last year or so, things have been moving along fairly quietly, without getting worse.

The period of "growing animation" is when most industries are working to full capacity and unemployment is correspondingly very low. The boom moves into the next phase which Marx called "overtrade", when a number of industries find that they have each produced more than they can sell at a profit in their particular market. Then comes the sudden crisis followed by the depression.

HOW THE BOOM ENDS

It is important to be clear about the state of "overtrade" which produces the crisis. It does not mean that there is a fixed total size of the market and that a crisis occurs when total production exceeds it. After every depression the total market and total production have gone to higher levels and will do so again. Nor does it mean that each and every industry is at the same time producing more than can be sold in its market. Such a situation does not arise and the term "general overproduction" is meaningless. Each industry produces for its own particular market but to some extent the expansion of production in one industry creates a larger market in some other industries. If, for example, British motor manufacturers, having produced and sold a million cars last year, decided to expand production so that, in total, an additional million cars are being produced this year, the production of this additional million will create additional markets for steel, rubber, glass, engines and other requirements of expanded motor car production even before the additional million cars are sold.

What actually happens in the boom is that some industries produce too much for their particular market. Competition to sell the excess reduces prices, leading to reduced profits, or no profit at all. Companies then scrap plans for further investment, reduce output and sack workers no longer needed. This in turn affects the market for other industries and if the combined effect is large enough, results in depression with its heavy unemployment.

In the autumn of 1973, after a period of expanding production and falling unemployment, a survey of companies was conducted, asking them if they were producing below capacity and if not, why not. While a considerable number reported that they were producing below capacity because of falling orders, about half the companies had more orders than they could meet and were producing below capacity because they could not recruit enough skilled workers or could not obtain enough materials and components. Among the listed scarce materials was steel. A few years later, when unemployment had risen sharply, there was a surplus of steel for which no market could be found and steel workers were being made redundant.

The capitalists in each industry are in business to make profit—the more the better. How much they succeed in making depends on several factors. Their profits will increase with bigger sales and higher selling prices, and a lower wages bill. Their profits will fall if sales fall or selling prices fall or the wages bill rises.

As heavy unemployment tends to depress wages, unemployment is also a factor. This has led some British Labour Party spokesmen to put the view that the Thatcher government in Britain deliberately created 31/2 million unemployed in order to hold down wages, help curb the rate at which the general price level is rising, and also to increase the amount of profit going to the capitalists. If it were true that governments control the rise and fall of unemployment, the Labour Party would need to explain why, in the four periods of Labour government in Britain in the 50 years 1929-1979, unemployment was higher at the end of each of the four periods than it was at the beginning.

If governments had such control, no government would want heavy unemployment, and the capitalists would want to have the unemployed at work producing profits for them. Capitalism is not under government control in that way: crises and depressions occur from time to time irrespective of the party in office and the policies it applies.

The Labour Party case against the Thatcher government is that Mrs Thatcher deliberately increased unemployment from 5.4 per cent in 1979 to 12.5 per cent in 1982 in order to depress wages and increase profits. But the reverse happened. Wages went up and profits went down. Official figures show that "income from employment" rose between 1979 and 1982 by £41,000 million while gross trading profits of companies fell by £331 million. More light is shed on it by showing gross trading profits each year as a percentage of total income from employment in that year. The percentage rose from 17.7 per cent in 1975 to a peak of 25.2 per cent in 1979, after which it declined each year, to 18.3 per cent in 1982. So, in the years 1979-1982, as unemployment went up, the relative amount of profit went down. With the recent expansion of sales, profits are now rising sharply again.

Looking further into the question, what causes a boom to develop into a crisis, it is useful to start with the early 19th century French economist J.B. Say, who thought that capitalism is a self-regulating system which, if left to market forces, would keep industry working to full capacity. He is remembered for his saying "every seller brings a buyer to market", by which he meant that every capitalist who sells a commodity then has money with which to buy another commodity.

But, as Marx pointed out, while each seller is able to buy another commodity, "no one is forthwith bound to purchase because he has just sold". He may choose not to do so and "if the split between the sale and the purchase becomes too pronounced", this "asserts itself by producing a crisis".

An example of this is the General Electric Company. At the beginning of the present depression, having sold commodities they had £400 million "cash" but instead of using it to buy materials with which to produce more of the commodities in their range of products, they chose to lend it and get income from the high current rates of interest. By the end of 1983 GEC's "cash mountain" had reached £1,400 million.

If GEC had behaved as J.B. Say supposed, they would have used their cash to recruit more workers, and expand output, but like many other companies, they have been closing some of their factories and declaring workers redundant. They have not done so because, so far, they have seen no prospect of making more profit by doing so.

NO SOLUTION IN MONETARY POLICY

Many economists and politicians blame the banks for the depression. They say that if only the banks would lend money to industry, production would expand again and unemployment would fall. The banks are in business to make profit by re-lending the money depositors lend to them and they do not need economists and politicians to tell them how to run their business. But banks are only interested in lending more money to companies which themselves see prospects of using it profitably. When trade improves and companies can expand investment and production profitably, there is no dearth of funds for that purpose, either direct from investors or through the banks. Marx dealt with the fallacy that depressions are the result of industry's inability to borrow funds and his case receives striking confirmation in the fact that, far from wanting to borrow from the banks, some of GEC's cash is lent to the banks.

Why does the prospect of investing profitably disappear for many companies and a crisis occur. One of the factors already mentioned is that some industries find at the height of the boom that they have produced more than can be sold at a profit in their particular market. It is inevitable. In the period of recovery from a depression the market for each industry is seen to be expanding, and the firms in that industry in each country are set to take advantage of the expansion. But they do not know with any precision how great the total expansion will turn out to be, and even if they did, they are in competition with each other and each section tries to get in as quickly as possible and to capture as large a share as it can. As Marx said, they all behave as if the market is limitless.

Another factor is the rise of wages causing a reduction of profits. In the phase of expansion and boom unemployment falls and the unions are in a position to push wages up. A general rise of wages beyond a certain point will wipe out profit for some companies and will influence the decisions of the more profitable companies about further investment and expansion of output.

A popular belief among trade unions is that raising wages is a cure for depression because it "expands the market". But of course a rise of wages does not "expand the market". What it does is to expand the market for the goods the workers buy, but correspondingly reduces the market for the consumer and luxury goods bought by the profit receivers and reduces the amount available for investment.

Marx dealt with the argument that raising wages would solve the problem by pointing out that in the boom wages do rise but without the supposed effect of averting a crisis.

If one were to attempt to clothe this tautology with a semblance of a profounder justification by saying that the working class receive too small a portion of their own product, and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally and the working class actually get a larger share of the annual product intended for consumption. From the point of view of the advocates of "simple" commonsense, such a period should rather remove a crisis. It seems, then, that capitalist production comprises certain conditions which are independent of good or bad will and permit the working class to enjoy that relative prosperity only momentarily, and at that always as a harbinger of a coming crisis. (Capital Vol II, page 476)

In the real world of capitalism the total demand for commodities is not increased either by raising wages at the expense of profits or by raising profits at the expense of wages, but there is a widely held belief today that there is another source of increasing demand in the supposed power of banks, by their lending transactions, to "create deposits" and thus add to total purchasing power. This belief was aptly described by the late professor Edwin Cannan as the "mystical school of banking theorists". It is held by the Keynesians and by the Monetarists. It is quite baseless; the banks can lend no more than depositors choose to lend them.

If the "mystical" theorists were right and the banks could create deposits which depositors could withdraw and spend on purchasing commodities, it would follow that the price level is determined by the banks. If you think that nobody could hold such an absurd view, this is what J.M. Keynes wrote in his book Monetary Reform:

The internal price level is mainly determined by the amount of credit created by the banks, chiefly the Big Five. .. The amount of credit, so created, is in its turn roughly measured by the volume of the bank deposits ... (1923, p.178)

According to this, if the banks "create" more deposits prices go up and if the banks "create" less deposits, prices go down. There is nothing in actual experience of capitalism to justify this fallacy, any more than there is in the Keynesian belief that depressions could be averted by the government borrowing more and spending more, or in the Monetarist belief that depression could be averted by the government borrowing less and spending less.

It was in 1977 that the British Labour Chancellor of the Exchequer Denis Healey, having seen unemployment rise from 600,000 to 1,700,000, announced the abandonment of Keynesian doctrine and the adoption of the Monetarist policy continued by the Thatcher government. Though unemployment did fall a little for a time, it then rose to 3½ million. Seven years after the adoption of Monetarism, it is still over 3 million.

IRRELEVANCE OF KEYNESIANISM

The Keynesians have two showpieces. One of them is Roosevelt's New Deal which is supposed to show how successful Keynes was. The other is what has happened in Britain between 1945 and 1977.

The man who said Roosevelt's New Deal was a piece of Keynesian success was Professor Dudley Dillard, Professor of economics at Maryland University, who wrote a book called The Economics of J.M. Keynes, published in 1948. Dillard said that Roosevelt in his New Deal did all the things which in 1936 Keynes advocated should be done in a depression. He ran a high budget deficit, he borrowed the money, he increased government expenditure, and government investment. Dillard said that it was a great success, and that the economic expansion between 1933 and 1937 "was one of the most rapid in the history of American business cycles. The speed of the recovery was undoubtedly conditioned by the depths to which activity had plummeted in 1932. It was nevertheless a remarkable recovery which was nurtured by fairly large-scale borrowing."

You will notice, by the way, that Dillard hedges a bit; he doesn't say that it was the only recovery, he says it was one of the most rapid. But Dillard did a useful thing. He compared America under Roosevelt with what was happening in Britain at the same time under the Ramsay MacDonald National Government. Whereas Roosevelt was running a policy which Keynesians later claimed was in line with their views, the British government were doing the opposite. In 1932 they were running the same policy which Mrs Thatcher is running now. So you have the two contrasted, Keynes in America and anti-Keynes in Britain, and what actually happened?

In 1932, unemployment in America was 24.1% and 22.1% in Britain. Five years later, in 1937, unemployment in America had fallen to 14.3%. In Britain it had fallen to 10.82%. The same thing happened in both countries; it was a bit more favourable in the anti-Keynesian Britain than it was in the Keynesian America. What sort of success is this? In 1938, which was 6 years after Roosevelt had obtained power, unemployment in America was 19.1 % and it was 13.5% in Britain. In other words, after 6 years of Keynesian policy, it was double what it was in America in 1983 in the midst of this present depression.

There is one other interesting aspect of this. The Keynesians say that if the government spends more it will not only create jobs directly, but it will stimulate private industry so that the private capitalists will spend more and invest more so you get the jobs being created both directly from government expenditure and throughout industry generally.

It would not however be of any use for the government to increase expenditure, if at the same time the capitalists were reducing their expenditure. What happened in America? If you compare the pre-depression year 1929 with 1938, government expenditure went up from 22 billion dollars to 34 billion dollars. That was an increase of 12 billion dollars. Fine, jobs were created and all the rest of it. But at the same time, private investment went down from 39 billion dollars to 21 billion dollars. So while government expenditure was going up, private investment was going down, which explains of course why unemployment was 19.1%. Dillard recognised this and he actually says that private investment "remained abnormally low" during that depression.

He and Keynes both worried about this. They said that it didn't seem to work the way they thought it would, and they both put forward the view that perhaps it would have been all right if only Roosevelt instead of increasing government expenditure by a mere 12 billion dollars had increased it by more. It is worth noticing that in Germany in 1920 to 1923 when the government didn't just increase expenditure by 22 billion dollars, but were doubling expenditure every month, after 3 years of it 25% of the German workers were out of work and nearly another 25% on half time.

BRITAIN AFTER THE WAR

The second showpiece of Keynesianism is what happened in Britain between 1945 and 1977. It is absolutely true that in the first ten years after the war unemployment was abnormally low in this country and averaged about 2% or less, but from 1955 unemployment began to rise there. Unemployment never remains absolutely stable, it goes up and down in this way, and in 1955 it began to rise. It went up from 500,000 in 1955 to 700,000 in 1963, 800,000 in 1968 and up to a million in 1970 under Heath and to 1,700,000 under the Labour Government in 1977.

Was Keynesian policy really the reason why unemployment was very low for the ten years after the war? We can quote two Keynesian economists. One is J. Robinson and the other is Alvin Hansan, who wrote in 1950 and 1953, both of whom, though they were Keynesians, said that the low unemployment was nothing to do with Keynes and that it would have happened in any event.

Now look at the real reason why unemployment started to rise after 1955. During the war, Germany and Japan, and some other countries, were devastated. They were no longer in the world market producing goods. It took them years to recover. They recovered, largely with the aid of American finance, and when they did so, they didn't only have their factories rebuilt, but they had them completely modernised and re-equipped, so that Germany and Japan became the leading cheap producers of commodities in the whole world. And as Germany and Japan came back into the market, British exports were squeezed out. There is quite a useful way of looking at it. There are figures available showing 11 countries, which included Germany and Japan, and their total export of manufactured goods and the proportion going to British capitalism. You can see that in 1955 the British proportion was about 20%, and you can see it coming down to 16%, 18%, 15%, 10%. You will have noticed that it was recently announced that for the first time in British history, Britain is now an importer of more manufactured goods than it exports.

So it can be seen that the two showpieces of Keynes had nothing whatever to do with Keynes. It did not work and the whole claim made for Keynesian policy is an illusion.

The course of events has justified Marx's explanation of crises and depressions against both the Monetarists and the Keynesians. It only needs to add that, unlike Keynes and the Monetarists, who were vainly trying to improve capitalism, Marx reached the conclusion that the only solution is to abolish capitalism and establish socialism.

Edgar Hardcastle (Britain)