Rear View: Socialism and nothing but (2018)

The Rear View Column from the September 2018 issue of the Socialist Standard

Socialism and nothing but

Attempts to reform capitalism have a very long history, as long as capitalism itself. The original Communist Manifesto of 1848 listed some progressive reforms, but ceased advocating them by 1872. William Morris gave a lecture in 1884 where he stated: ‘the palliatives over which many worthy people are busying themselves now are useless because they are but unorganized partial revolts against a vast, wide-spreading, grasping organization which will, with the unconscious instinct of a plant, meet every attempt at bettering the conditions of the people with an attack on a fresh side.’ It would be incorrect, however, to deny that certain reforms won by the our class have helped to improve general living and working conditions.

There are examples of this in the fields as education, housing, child employment, work conditions and social security. However, such ‘successes’ have in reality done little more than to keep workers and their families functioning and, while it has taken the edge off the problem, it has rarely managed to remove it completely, as the profusion of charities – nearly 170,000 listed at www.gov.uk – attests.

Mote in our eyes

The whole point, missed by charities like Child Poverty Action, is that the privations afflict the working class – the top 1 percent have no such worries because they do not depend on working for their living. Mervyn Pike in 1966 as the then Conservative Shadow Minister of Social Security stated ‘we all recognise that all large families, except those who are very rich, have greater difficulties than smaller families.’  Poverty persists worldwide. ‘The little girl hated going to the bathroom at school. The pit toilets were so dark, dirty and crumbling. Many children were so afraid of them that they simply relieved themselves in the schoolyard to avoid the ordeal. But as she played with her best friend during recess, the girl, Ziyanda Nkosi, a 6-year-old first grader, really had to go. She stepped warily inside the closet-like latrine. Even with the gentle pressure of her tiny frame, the floor caved in. Ziyanda flailed wildly, clinging to the edges of the hole, frantically trying to keep herself from falling in and drowning in the fetid pool below. “Mommy! Mommy!” she screamed, managing to hold on long enough for an older boy to run in and save her. Hundreds of parents . . . demanded justice from the provincial government led by David Mabuza, a former math teacher who had become one of the most powerful figures in the African National Congress and was positioning himself to become South Africa’s deputy president’ (‘South Africa Vows to End Corruption. Are Its New Leaders Part of the Problem?’, nytimes.com, 4 August).

The revolutionary alternative

History shows that organisations which claim to want socialism, and which also promote reforms, ignore socialism and spend their time working for reforms. The Social Democratic Federation had its first meeting in June 1881, yet by December 1884 some 200 members including William Morris resigned saying they had not joined a socialist organisation to advocate reforms. Today, every major party in Europe, the US and elsewhere, whether originally socialist – even the Humpty Dumpty variety – or not, seeks the opportunity to govern capitalism by offering various reforms. They repeatedly fail dismally as far as our class is concerned. If you are convinced, however, that groups or parties promising reforms deserve your support consider:

1. The campaign, whether directed at right-wing or left-wing governments, will often only succeed if it can be reconciled with the profit-making needs of the system, i.e., the reform will often be turned to the benefit of the capitalist class at the expense of any working class gain.
2. Any reform can be reversed and eroded later if a government finds it necessary.
3. Reforms rarely, if ever, actually solve the problem they were intended to solve.

In other words, although individual reforms may be worthy of support, the political strategy of reformism – promising to win reforms on the behalf of others is a misery-go-round. The profit motive of capitalism is a major cause of the problems we face in today’s society – ever increasing inequality, poverty, alienation, crime, homelessness, environmental degradation, the list could go on and on. There are countless ways in which the working class (even members of the capitalist class) suffer as a result of the profit system. Unless we organise and choose the revolutionary road, the profit system will continue on its blind, unswerving path.

Anti-imperialist rhetoric (2018)

Book Review from the September 2018 issue of the Socialist Standard

Indefensible. Democracy, Counter-Revolution, and the Rhetoric of Anti-Imperialism. By Rohini Hensman. Haymarket Books. 2018.  380 pages.

This book sets out to expose the hypocrisy of those the author calls ‘pseudo-anti-imperialists’.  She criticises them for their opposition to Western imperialism only and for supporting all sorts of oppressive regimes on the grounds that they are opposed to the West. When the West is involved in military action, these ‘anti-imperialists’ support the opposing side whatever the nature of their regime. She instances and goes into detail about Serbia, Iran, Iraq and Syria. Argentina, Libya and North Korea could be added.

What is odd is that, although Russia doesn’t claim to be socialist any more, some continue to exclude it from anti-imperialist criticism, as she documents in detail over Ukraine and Syria. She has no illusions about the former USSR. It was, she says, state capitalism, making the additional point that a socialist revolution was not possible there in 1917. Not that knowing that Russia was state capitalist necessarily rules out pseudo-anti-imperialism. The Stop the War Coalition is supported by people who know this, yet while it loudly criticises bombing in Syria by the West, Turkey and Israel it is not very vocal about bombing there by Russia and the Syrian government. She mentions Corbyn as being in this tradition.

This is a fair criticism, and one we have long made ourselves.

Anti-imperialism is a slippery concept because its meaning depends on how you define imperialism. This ought to mean the policy of acquiring an empire, which European states joined by the USA and Japan increasingly pursued in the latter part of the 19th century. This was a development that needed analysing. Those in the Marxist tradition tended to give an economic explanation (acquiring a protected market, need to export capital). Lenin elevated imperialism to ‘the highest stage of capitalism’ and that’s when the rot set in.

It wasn’t that his analysis of the First World War as a war between imperialist powers for the re-division of the world was wrong, but the political implications he drew from this once he himself was in control of the Russian state. First, he developed into a full-blown theory his idea that the parties of the Second International had supported their governments in the war because the section of the working class they represented benefitted from imperialism in terms of higher wages and social reforms. Then, the revolution in Europe having failed to materialise (it was never on the cards anyway), he saw in the rising of ‘the peoples of the East’ against imperialism a way to relieve pressure on the Bolshevik regime in Russia.

Hence ‘anti-imperialism’ became the policy of the Russian state and its supporters abroad. Under Stalin after the Second World War, it became opposition to the West, the US-led bloc that was its rival. It was hypocritical because by then Russia too was manifestly an imperialist power, having acquired the Baltic states and parts of Poland under the 1939 Nazi-Soviet Pact and, after the Second World War, Eastern Europe, apart from the empire in Central Asia it had inherited from Tsarism. Hensman aptly writes of ‘the Russian State Capitalist Empire.’

Her starting point is that, as Rosa Luxemburg put it out in a passage she quotes:

  ‘Democracy is indispensable to the working class because only through the exercise of its democratic rights, in the struggle for democracy, can the proletariat become aware of its class interests and its historic task.’

From which she concludes that it is in the interest of workers in countries which do not have political democracy to obtain it, whether or not the government there is ‘anti-imperialist.’ True, but the way to do this is not to support one capitalist group against another either in politics and certainly not in war, nor by the various changes to the UN she naively suggests in the final chapter.

Adam Buick

Franchise Centenary: A Very Limited Democracy (2018)

Elizabeth Garrett Anderson (1836 – 1917)

From the September 2018 issue of the Socialist Standard

Centenary of Votes for All Men and Some Women

The demonstrations in June to mark the centenary of the coming into force of the Representation of the People Act 1918 (which was obviously a good thing) didn’t tell the whole picture. It is quite well-established now that the Suffragists (constitutionalists) and the Suffragettes (direct actionists) were both campaigning not for votes for all women, but only for votes for women on the same terms as men, votes for ‘middle class property-owning women’ (see: LINK).

As about a third of men didn’t have the vote before 1918, this would have left an even higher proportion of women without the vote. Hence the criticism of both the Suffragists and Suffragettes for standing for ‘Votes for Ladies’ and ‘Votes for Rich Women’.

Actually, already before 1918, Ladies had the vote, but only for local elections. Bebel describes the position in the 1910 edition of his Women and Socialism:

    ‘In regard to municipal administration, woman suffrage in Great Britain is constantly expanding. In the parish councils tax-paying women have a voice and vote as well as men. Since 1899, women in England have the right to vote for town, district and county councils. In the rural districts all proprietors and lodgers – including the female ones – who reside in the parish or district are entitled to vote. All inhabitants who are of age may be elected to the above-named bodies, regardless of sex. Women vote for members of school boards, and, since 1870, are eligible to stand on the same terms as men. But in 1903 the reactionary English school law deprived women of the right of being elected to the school board in the county of London. Since 1869 independent and unmarried women have the right to vote for the privy councils.
   Two laws enacted in 1907 made unmarried women in England and Scotland eligible to district and county councils. But a woman who may be elected as chairman of such a council, shall thereby not hold the office of justice of peace that is connected with it. Women are also eligible to parish councils and as overseers of the poor. The first woman mayor was elected in Aldeburgh on November 9, 1908. In 1908 there were 1162 women on English boards of charity and 615 women on school boards. In Ireland, tax-paying women have had municipal suffrage since 1887, and since 1896 they may vote for members of boards of charity and be elected to same.’

The Mayor of Aldeburgh, a town on the Suffolk coast, was Elizabeth Garret Anderson, the first woman doctor and sister of Millicent Fawcett, the Leader of the Suffragist National Union of Women’s Suffrage Societies, whose statue outside Parliament was unveiled in April.

Tristram Hunt in his (hostile) biography of Engels notes that in the 1876 elections to the London School Board Engels gave all his 7 votes to the woman candidate. This was Alice Westlake in the Marylebone ward, who topped the poll.

She was a Suffragist who was later a member of the central committee of the NUWSS. And like Fawcett a Liberal.

What, it might be asked, was Engels doing voting for a Liberal? Presumably he wanted to make the point that socialists stand for woman’s political and social equality. In which case, he was wrong for the right reason. Socialists do stand, and have always stood for women’s equality.

How to Destroy Capitalism: Blueprint for Revolution (2018)

From the September 2018 issue of the Socialist Standard

 In 2016 the pressure group Corporate Watch published a book Capitalism, What it is and How Can We Destroy it? Written by a dyed-in-the-wool anarchist, it didn’t provide a satisfactory answer to the second question, just that if enough individuals did their anarchist thing that would do it. Nor is it a question of simply destroying capitalism but of replacing it with a society that does serve human needs and interests. Still, how to get rid of capitalism is a good question. But, first, what is capitalism?

Economic process

From a purely economic point of view, capitalism is a process of ‘expanding value’, as the first translators of Marx’s Capital rendered the German word he had used (modern translations translate the same word as ‘valorisation’ but that doesn’t capture Marx’s meaning so immediately).

For Marx, capital was not simply items of wealth used to produce more wealth, but a sum of values used to create more value. This is why he logically began Capital by defining what he meant by ‘value’. Basically, value was the form an item of wealth assumed when it was produced for sale and which governed the proportions in which it exchanged with other items of wealth produced for sale. For Marx, its size reflected the amount of labour needed on average to produce it from start to finish.

Capital, then, is the value of a combination of items of wealth – buildings, machines, raw materials, intermediate products, energy, etc – plus the value equivalent of the labour-power needed to use them to produce other items of wealth. In money terms, capital is a sum of money used to produce a greater sum of money. The aim of capitalist production is to end up with more money (more value) than before. Hence capital is ‘expanding value’. For Marx, the source of the new value was the extra value added by those who did the actual producing over and above what they were paid as wages (the value of their labour–power).

Legal entities

Actually, of course, capitalism is not just an economic process; it is one embedded in social institutions and can only take place through them as the action of particular people who Marx described as ‘functionaries of capital’. These are those who own the factories, machines, etc that make up the means of production.

Originally, when capitalist production started, means of production were the property of (units of capital were embodied in) individuals or a small group of partners. But, as capitalism developed, the amount of money required (the value of the means of production) grew too large for an individual or partners to mobilise. At that point, reached by the middle of the 19th century, the law had to be changed to permit capital to be embodied in a ‘company’ (Britain) or ‘corporation’ (US). This is a legal form in which means of production are collectively owned by shareholders whose liability to pay for any debts if things go wrong is limited to the amount of their shareholding. Today, most capital in terms of value is embodied in this type of legal entity.

In the limited liability company the state has created a legal entity to embody capital that has a fictitious personality in that it can act as if it were a person, by entering into contracts with real persons and with other companies as legal persons. Joel Bakan in his 2004 documentary and book The Corporation takes up this fiction and shows that, if a company really were a person, that person would be diagnosed as a psychopath. This, in view of their relentless pursuit of a single aim – that of making as much profit as possible – to which everything else is subordinated and regardless of the effect on others.

This is a valid point but it is not the legal form of a corporation that imposes this behaviour on its directors even though it lays this down as their legal duty. The legal form reflects the underlying economic process of any capital’s need to expand its value. It is economic reality that determined the law, not the law that has determined economic reality. This is why no change in company law can change the way in which the capitalist economic system works.

In fact, the other legal forms that have been legislated for to embody capital – nationalised industries, mutuals, cooperatives – are under the same pressure to seek to maximise profit as a condition for surviving as an economic institution embodying capital. It is just that in their case the trustees – the functionaries of capital – are different: government appointees, even worker-elected boards. As are the rules for distributing profits that are not re-invested (not added to the original value): they cannot be distributed as dividends (though they can be, and are, as bloated salaries).

Uncreating corporations

That the main form in which most capital is embodied today is a state-created legal entity provides a clue as to one step in replacing capitalism – winning control of the state so as to be in a position to ‘uncreate’ these legal entities. This done, the means of production cease to be private property and become nobody’s property; which is the same as saying they become everybody’s common property.

This new reality too has to be embodied in social institutions. Political action to abolish corporations presupposes that there is a majority in favour of this but also that this majority is organised on the ground ready to take over control of the now commonly-owned means of production and operate them.

It is not as if capitalist shareholders own the means of production vested in these legal entities in the same way as they personally possess personal items such as clothes, houses, or cars that can be physically taken from them. This is not what needs to be done in the case of the factories and machines owned by corporations as the capitalists who own them don’t do so by virtue of physically possessing them but by virtue of holding pieces of paper saying that they are shareholders in a legal entity with a fictitious personality. The obvious way to end their ownership is to render these pieces of paper worthless by dissolving the artificial entity.

Workers in a factory could take it over but that wouldn’t result in common ownership by society as a whole. At most it would result in worker ownership. To achieve society-wide common ownership requires society-wide action. The easiest way to do this is by political and workplace organisation, political to end the legal status of corporations and workplace to continue to operate the means of production.

The alternative, that used to be more widely proposed and still is by those who haven’t thought the matter through, would be for some society-wide economic organisation to proceed to take over the means of production in a general workplace occupation while ignoring the state. This would be stupid when there’s an easier way. If a majority favour taking over the means of production, that majority would also be able to take control of political power through the ballot box. On the other hand, if they won’t vote for it they are not likely to take the bolder step of actually doing it. It is true that, given a majority in favour of making the means of production commonly owned by society, ignoring or trying to by-pass the state might succeed in the end but at the price of unnecessary chaos and violence. Why break into a house when you can get the keys to the front door?

When the means of production cease to be owned by legal entities and become common property, at the same time they also cease to be capital in that they can now be used to produce directly and solely to meet people’s needs. The economic process – the economic imperative – to ‘expand value’ would no longer impose itself. Capitalism will have been abolished.

Adam Buick

Cooking the Books: When did capitalism start? (2018)

The Cooking the Books column from the September 2018 issue of the Socialist Standard

 In an interview in In These Times (10 May) about his latest book Bullshit Jobs, celebrity anarchist David Graeber raised an interesting point. After digressing to say that he was currently working with people campaigning for a basic income and wondering whether asking the state to pay people money was compatible with anarchism, he suggested that we might be living in a long period when capitalism was transforming into some other form of society (but ‘which might be just as bad’); but how would we know? He went on:

  ‘I remember having this argument with conventional Marxists about the transition from feudalism to capitalism. Okay, say that capitalism started around 1500. And the Marxists insist that capitalism is organized around wage labor. But wage labor was marginal until the industrial revolution, around 1750. How can you say that wage labor is central to capitalism if, for 250 years, it was a tiny element?’ (Link. ).

He said he got the reply:

  ‘Well, you’re not thinking dialectically. From 1500 to 1750, people were in a process that was going to lead to wage labor, they just didn’t realize yet.’

 We were one of the ‘conventional Marxists’ he discussed this with, in the October 2012 Socialist Standard. But this can’t have been us, as our reply was that capitalism is a market society in which all the elements of production, including human labour power, are bought and sold, but that this would not complete until the actual producers had been separated from the means of production, whether land or tools; which was a gradual process.

 On the question of whether the elites in control of political power up to 1750 understood where society was going, we replied that a section of them were indeed consciously seeking to spread market relations and the concept of the individual free to enter market relations with other individuals; which did include the right to sell their ability to work.

 Another reply (again, not ours), would be that of Immanuel Wallerstein and the world-system theorists that the essence of capitalism was not wage-labour but production for sale on the world market with a view to profit, whether carried out by serfs (as in Eastern Europe) or chattel slaves (as in the Americas) and not just by wage-workers. However, while capital investment in production of cash crops by serfs or slaves was viable, this was not the case for manufactured products; here wage-labour was more efficient from a capitalist point of view (which of course is why the slave trade and then slavery were abolished in favour of wage-slavery).

 Capitalism is a system where money-capital is invested in production for sale with a view to a monetary profit. ‘Merchant capitalism’, which in previous discussions Graeber said some Marxists had suggested was what existed from 1500 to 1750, was where merchants invested money-capital with a view to profit, not in production, but in buying (or looting) products from one part of the world and selling them in another part at a higher price. It might have been a transition to capitalist production but it wasn’t what Marx meant by ‘the capitalist mode of production’. 

 In any event, to say that capitalist production first appeared in the 16th century is not the same as saying that capitalism as a socio-economic system started then. The capitalist ‘mode of production’ gradually spread, with the aid of the state, until it became the dominant one. That would be the point at which it could be said that capitalism as a society had come into being. 1750 seems about right for this. Adam Smith, writing in 1776, was already using a three-class model, even for agricultural production, of landowners, tenant farmers and wage-workers.

Memories of the Future (2018)

The Wood for the Trees Column from the September 2018 issue of the Socialist Standard

Humankind has always had a fascination for both its past and its future. Although the events that make up history are unchangeable their interpretation is always evolving and dependent, to a large extent, on the political and cultural context of the historian.

The same is true of speculations and prophesies for the future. When I was a kid in the 1960s the optimism for the future was ubiquitous and unbounded. The dominant form of political speculation for the future today is dystopian. The reasons for this are many: the failures of leftist politics to produce the promised social justice together with the perceived betrayal of technology to enable a better life for the majority are two of the more obvious. As socialism invests heavily in an analysis of the past, present and future what does it make of this dystopian vision so beloved by writers, movie makers and political prophets of the early twenty-first century within western culture?

Two of my memorable examples of ’60s optimism were a couple of TV shows: Tomorrow’s World and the US sci-fi drama Star Trek. The former programme was an optimistic compilation of technical innovations that promised both greater productive efficiency and thus more quality leisure time. Watching it today it seems hopelessly naïve and, more often than not, completely wrong about the social implications of specific technological inventions. Star Trek remains, through various TV and movie spinoffs, one of the few optimistic visions of human future. Ironically the American cast represented a future with no gods, countries or money! It was the child of the optimism of ’60s liberal America and the ‘baby boomer’ generation of post Second World War youth culture. The aliens in that show represented the dark side of US culture: Borg/Fascism, Farengi/Capitalism, Klingon/Gung Ho Militarism, etc. Many of the storylines circulated around the concept of the ‘Prime Directive’ which prohibited the human crew from interfering with the technological evolution of less developed alien cultures (a response, perhaps, to the genocide of the indigenous American population of the previous century). For socialists this represents an optimistic and, to the surprise of many, a realistic vision of the future. Let’s look at the dystopian narrative and define why socialists find many of them unrealistic.

There are several kinds of dystopian narratives including the post-apocalyptic which may be a result of a pandemic or natural disaster but what really interests and frustrates socialists is the technological and political dystopia. The idea that technology can and does have unintended social consequences is taken to an extreme in such films as Terminator, The Matrix and more recently Anon where any political responsibility for the imagined futuristic cultural context is completely absent. We have become the puppets of our own products in these films and although some recognition of the secrecy of business or state is present the blame for the plight of the characters is firmly with technology itself. Blaming humanity’s technological progress rather than its political institutions is the ultimate Luddite excuse for political cynicism and underlines the limited economic and historical understanding of those who create these stories. In the future such films will be seen to represent the tropes associated with the despair of neo-liberalism and the failure of the left just as the science fiction films of the 1950s are now seen primarily as a response to the ‘cold war’ politics of the time.

Political dystopias such as Huxley’s Brave New World, Orwell’s 1984 and Rand’s Anthem are critiques of the attempt to create utopias and the associated ideas of rebellion and revolution. Whether they are right-wing or left-wing dream societies the implication is that any attempt to improve society is doomed to create something infinitely worse than that which it seeks to replace. Again a basic political analysis is absent because these are merely different types of capitalism which is always at the heart of actual and fictional political failure. We are dissuaded from the political struggle for a better future by these narratives and as such they represent a reactionary defense of the status quo. As critiques of the politics of left and right they are informative, if rather repetitive, but they do not and cannot represent a valid critique of socialism. These stories feed the political cynicism which has been created by the failure of leftwing and, to a lesser degree, rightwing political regimes and represents one of socialism’s greatest enemies.

If humankind’s future is indeed to be in space then economic activity will have to be liberated from the fetters of capitalism and its production for the profit of the few. Only when the economic security of the majority is secured can such an undertaking be morally and economically justified – and only socialism can provide this. This is why we find high tech dystopias so unrealistic; if we survive as a species to a point where space travel is ubiquitous it can surely only be post socialist revolution. Our limited forays into the firmament have mainly been motivated by military/economic considerations or as a new playground for the mega-rich with pure scientific curiosity being an afterthought. This may also be a reason why extraterrestrials have not contacted us; they have respected the ‘prime directive’ in terms of our very limited political development and impatiently await the time when the answer to their test demand ‘take me to your leader’ will be answered with: ‘we’re sorry but we have no leader’.

Wez

Pathfinders: Plastic not so fantastic (2018)

The Pathfinders Column from the September 2018 issue of the Socialist Standard

On 10 July 1940 war-time Britain saw the launch of the Great Aluminium Scare and a Beaverbrook campaign to ‘turn your pots and pans into Spitfires and Hurricanes, Blenheims and Wellingtons’. Patriotic citizens responded by sacrificing useful metal kitchenware and bathroom fittings which created mountains all over the country. Scrap metal mania even extended to tearing up the railings round municipal parks, though cast iron scrap had little practical value. Indeed most of these scrap mountains went into landfill or post-war scrap metal shops since, as RAF Museum curator Rob Skitmore pointed out in 2005, ‘in fact we had lots of aluminium, what we needed more of were pilots’ (see Link).

The point of course was to give the population something practical to do so they could feel like part of the war effort. In short, a propaganda exercise. After all Lord Beaverbrook, aside from being Churchill’s minister of aircraft production, was also owner of the Daily Express, the world’s largest circulation newspaper at that time.

Is something similar happening today with the Great Plastic Scare? It seems to have started with the BBC Blue Planet II documentary earlier this year, which highlighted the problem of plastic ocean waste and resurrected 2016 World Economic Forum predictions that by 2050 there will be more plastic in the oceans than fish. Now the rush is on to ditch the use of plastic cups, cotton buds, plastic straws, wet wipes, plastic bags, plastic food wrappings, in short, plastic anything. The UK government is now compiling a list of plastic items to ban and a plastic tax is being considered by the Treasury (‘Public ‘back’ taxes to tackle single-use plastic waste’, BBC, 18 August). Practically overnight, plastic has become the new demon.

The problem is, things are always more complicated than news headlines make them out to be. While there’s no doubt that global capitalism is using the planet like a giant dustbin, the solutions aren’t always so obvious. Whatever you do is going to have an environmental impact. If you swap single-use plastic bags for a cotton tote bag, you’ll have to use it 131 times before reaching impact parity, because of the high environmental cost of cotton production (New Scientist, 13 June). If you avoid food containing palm oil but drive with the latest ‘green’ biofuels, you’ll be burning palm oil instead of eating it and thus still contributing to the devastation of Madagascar. In theory one could use different vegetable oils in fuel, but they would require massively more land than oil palms need. If you decide to avoid fossil gas central heating in favour of a trendy and ‘clean’ wood burning stove, you’ll be treating your neighbours to the equivalent of eight trucks parked in the street with their engines on all night (New Scientist, 2 June).

People during the war probably didn’t need or want to know that they were making pointless sacrifices. What they craved was the feelgood factor. So today people don’t perhaps want to know that most of the contents of their recycle bins is likely to end up incinerated or in landfill, or sent abroad. According to the National Audit Office, the government doesn’t have any idea whether or what percentage of ‘recyclables’ is being recycled, has ‘turned a blind eye’ to known problems in the waste stream, has only carried out 40 percent of the recycling checks it was supposed to, and has been exporting over 50 percent of the waste it claims as ‘recycled’ (‘Recycled packaging ‘may end up in landfill’, warns watchdog’, BBC, 23 July).

You’d be excused for thinking that the whole recycling programme is a bit of a con. Most of the plastic we rinse and put in recycle bins is not actually recyclable, largely because manufacturers use cheap, low-grade and non-biodegradable industrial polymers. Well of course they do, but other reasons are more trivial. Fresh food containers are very often carbon black because food products apparently look good on black, but recycling machines can’t detect black (‘Plastic food pots and trays are often unrecyclable, say councils’, BBC, 4 August). Plastic cups don’t get recycled, not because they couldn’t be, but because there is no regional collection infrastructure for them. And if there was, would the road haulage fleet required then cancel out the carbon benefits of the recycling?

It’s not that we shouldn’t bother making any individual efforts. Of course we should, and many of us do, because a future socialist society wouldn’t last five minutes without a strong and abiding sense of personal responsibility. But too much focus on little things like cotton buds and wet wipes – which apparently cause giant ‘fatbergs’ in London’s sewage system – can become a seductive invitation to forget the big picture, to kid yourself you’re doing something when you’re really not.

Some young activists, too young even to vote, are making bold attempts to take their governments, or international corporations to court over climate change (New Scientist, 18 August). How much success these ‘climate kids’ are going to have suing capitalist institutions inside capitalist courts is something socialists can hazard a cynical guess at. But at least they’re trying to raise the climate stakes to match the rising temperature.

What really needs putting in the dock of course is capitalism itself, and the total control and squandering of Earth’s resources by less than 1 percent of its population. If the public scare about plastic is viewed as an indicator of a growing sense of communal outrage on behalf of the planet, we might be encouraged, but only if this outrage starts to take an explicit and political form. If however people are happy to settle for tokenistic efforts for the sake of a quiet life, the class war will continue indefinitely, and socialists will have to battle on alone.

Genoa Bridge Collapse

As we go to press the cause of this collapse is not yet known, but metal corrosion in the steel cables reinforcing the concrete structure is suspected. Acoustic sensors are a new technology which can ‘hear’ internal corrosion, and recently resulted in London’s Hammersmith Flyover being urgently refurbished, but most bridges don’t have them, as the cost would be huge. Globally bridges are often in a poor state. 7 percent of French bridges are at risk of collapse, 12 percent of Germany’s are in bad condition, and 54,000 US bridges are ‘structurally deficient’ (New Scientist, 17 August). No doubt a 10-year recession and government cutbacks in every country have done nothing to improve matters. Whatever the state of road bridges in socialism might be, at least we can say that saving money wouldn’t be a factor.

Paddy Shannon

Philanthrocapitalism IV: The Messianic Rich (2018)

From the August 2018 issue of the Socialist Standard

Part Three

The concluding article of our series on ‘philanthrocapitalism’

No such thing as a free gift

A significant motive driving philanthrocapitalism has to do with the tax incentives involved in charitable contributions. In most countries in the world, taxes constitute the primary source of government revenue (government borrowing, mainly through the bond market, is another important source). Paying less tax may be good for the businesses concerned but it obviously impacts on government revenue and, hence, the state’s capacity to finance reforms such as social welfare programmes. That in turn has consequences for private charity and the scale of the task it faces.

Some philanthrocapitalists appear to have grasped this point well enough. An example of this is the Boston-based project, Responsible Wealth – a ‘network of business leaders, investors, and inheritors in the richest 5%’ of the US population. It lists amongst its supporters Warren Buffet and Bill Gates Snr and is an offshoot of the aforementioned ‘United for a Fair Economy’ which it describes as ‘an organization that supports workers to organize and advocate for policies that make our economy more fair and equitable’ (www.responsiblewealth.org).

Amongst other things, it calls for higher taxes on the very rich and an increased level of public investment. However, the bizarre spectacle of billionaires taking up apparently left-wing causes might not be all that it seems. There is undoubtedly an element of self-interest involved, based on a recognition that the way things are panning out might not be good for the long-term stability and prosperity of capitalism itself. Though a system of cut-throat competition tends to foster ‘short-termism’, that does not rule out the possibility of sections of the capitalist ruling class rising above their circumstances to take a longer-term perspective.

Given that the state, famously described by Marx as the ‘executive committee of the ruling class’ has more leeway than capitalist corporations in what it is able to do within the context of market constraints, it is not surprising that such a longer-term perspective has tended to be associated with, and organised around, a more statist-oriented prescriptive approach. An example of this would be the kind of thinking that led to the setting up of the modern welfare state.

Germany under its distinctly non-left-wing chancellor, Bismarck, in the late 19th and early 20th centuries, was the first country to truly implement this idea of a welfare state. As Germany began to overtake Great Britain as an industrial power around this time, sections of the British capitalist class, alarmed by this development, began to take a serious interest in Germany’s state welfare programme. They began to see a connection between this and Germany’s growing industrial strength. Years later, in 1943, the millionaire Tory industrialist, Samuel Courtauld, articulated such thinking when he strongly endorsed the Beveridge Report’s proposal to set up a welfare state in Britain too on the grounds that ‘Social security of this nature will be about the most profitable long-term investment the country could make. It will not undermine the morale of the nations’ workers: it will ultimately lead to higher efficiency among them and a lowering of production costs’ (Manchester Guardian, 19 February 1943).

However, there is always that current of short-term thinking, generated by market competition, against which this longer-term perspective has to do constant battle. Economic boom conditions can, to some extent, shore up the latter perspective, by making state welfare programmes more affordable and, also, by empowering workers in their bid to increase the social wage. But when boom turns to bust as it did in the 1970s, ushering in an era of neoliberal austerity, philanthrocapitalism was then able to play a more prominent role, filling the vacuum created by the retreat of the welfare state. Philanthrocapitalism came to be increasingly identified as the bearer and nurturer of this longer-term perspective which the neoliberal state appeared to have abandoned in its bid to cut costs and restore national ‘competitiveness’. Hence the title of Bishop and Green’s book, Philanthrocapitalism: How the Rich can Save the World, referred to earlier. The thinking behind this was that enormous fortunes of the super-rich to some extent cushioned them from the short-term exigencies of cut-throat competition, giving them the freedom to spend their money on whatever they chose

The economics of philanthrocapitalism    

Though philanthrocapitalists may profess to adopt a long-term perspective of wanting to ‘save the world’, their actions all too often belie the image they are intent upon projecting. Take the case of taxes. While some philanthrocapitalists such as those involved in ‘United for a Fair Economy’ seem intent upon advocating higher taxes for people like themselves, this does not apparently prevent them trying to run their own businesses in a manner deliberately designed to avoid paying taxes as far as possible, knowing full well the fiscal impact of this on a state’s budget and on the state’s ability to fund social welfare programmes.

This incongruity might seem puzzling but it is quite predictable in terms of game theory. Our ‘selfless’ philanthrocapitalists are quite willing to pay more taxes providing everyone else – meaning their market rivals – does as well. Until then, they will strenuously seek to avoid paying taxes as far as possible just like their ‘selfish’ counterparts in the capitalist class (who they will also try to emotionally blackmail through such stratagems as the ‘Giving Pledge’ to ensure the costs of philanthropy are shared more evenly). After all, taxation is ultimately a burden on the capitalist class, not the working class, and the squabble over that burden essentially boils down to a conflict of interests and perspectives between different groups of capitalists over how a capitalist economy ought to be administered.

Tax avoidance, unlike tax evasion, is of course perfectly legal under current legislation. The higher the taxes the stronger the incentive to avoid them, since taxation eats into profit margins and impairs the ability of businesses to compete on an increasingly globalised market. The significance of this to philanthrocapitalism lies in the fact that charitable donations are one of the ways in which the payment of taxes can be avoided.

In America, perhaps contrary to impressions, corporate taxes have been historically amongst the highest in the world (although Trump’s recent tax reform bill will cut these to a level just below the global average as well as reducing some personal taxes). Large US-based transnational corporations are particularly adept at tax avoidance, engaging in such sharp practices as transfer pricing and intra-corporate loans, and being able to employ expensive legal terms to ensure everything appears hunky dory and above board. Huge sums of money are offshored into tax havens or reinvested in other foreign operations. As Farok Contractor notes: ‘The accumulated, but unrepatriated, profits of American multinationals’ foreign subsidiaries—which have legally escaped US taxation—are estimated between $2.1 and $3 trillion’ (Rutgers Business Review, Vol. 1, No. 1, pp. 27–43).

As stated, making charitable donations is just another form of tax avoidance. Indeed, some of the most notable philanthrocapitalists are associated with businesses with a notorious record of tax avoidance. One example is Bill Gates. According to a report by The Independent: ‘Microsoft has reportedly avoided up to £100m a year in UK corporation tax by routing its sales through Ireland’ (19 June 2016). Over £8bn of revenues from computers and software bought by customers in the UK has been diverted to Ireland since 2011, under an arrangement agreed with HM Revenue & Customs.

Another example is Mark Zuckerberg. His corporation, Facebook, has been severely criticised for its tax avoidance stratagems and, like Microsoft, has resorted to funnelling profits through Ireland. In 2014, Facebook paid only a paltry £4,327 in corporation tax on an annual profit of £1.9bn (though the company has more recently agreed to pay several millions in taxes).

The case of Zuckerberg and Gates epitomises a trend in philanthrocapitalism. Instead of philanthrocapitalists giving directly to charities, they are increasingly setting up foundations of their own as a vehicle through which they can exercise ‘social entrepreneurship’, funnelling money to causes of their choosing. Some like Buffet seem to be the exception to this trend. In his case, his charitable donations have mainly gone to the Gates Foundation, the largest of its kind in the world, thereby amplifying its already enormous power and reach.

Indeed, the Gates Foundation is said to contribute about 10 percent of the total budget of the World Health Organisation which, critics claim, gives it undue influence on policy making. In a special report, the ‘Global Justice Now’ campaign group comment on the nefarious workings of the Foundation: ‘We argue that this is far from a neutral charitable strategy but instead an ideological commitment to promote neo-liberal economic policies and corporate globalisation. Big business is directly benefiting, in particular in the fields of agriculture and health, as a result of the foundation’s activities, despite evidence to show that business solutions are not the most effective’ (LINK.).

How philanthrocapitalism goes about financing various causes, gives us more clues as to its real nature and intent.

While attention is focussed on the huge sums of money involved in charitable giving, it is easy to overlook what all that money is spent on. Quite a significant chunk of it is spent, in the first instance, on administrative costs and fundraising (which is, of course, indispensable in a capitalist money-based economy). According to a report by the Daily Mail (12 Dec 2015), one in five of the biggest charities in the UK are ‘spending less than half their income on good work’ and, in a few cases, as little as 1 percent.

It is difficult to avoid the conclusion that many of these charities are little more than a lucrative gravy train for those employed in them. Indeed, the New York Times, (29 March, 2008) refers to a report on the fraudulent misuse of charitable money for personal gain in the United States. The authors of this report estimated that the overall costs of fraud came to a staggering $40 billion for 2006, or some 13 percent of the money given to charity in the US. In early 2007, another report by the Center on Philanthropy at Indiana University (partnered by Google) provided some revealing data on the subject of what charitable money is spent on. According to the report, less than one third of the money that the American public gave to non-profit organisations in 2005 was focused on the needs of the economically disadvantaged. Of the total of $250 billion donated that year, less than $78 billion explicitly targeted those in need.

While we tend to think of charity as essentially an endeavour seeking to ease the plight of precisely those in need, this can be quite misleading. Ginia Bellafante in the New York Times (Sept 8, 2012) notes that:

  ‘Nationally, 32 percent of the $298 billion given away last year went to religious institutions, 13 percent to cultural organizations and 12 percent to social services, according to a report issued annually by the American Association of Fundraising Counsel. But if giving were conducted with the greatest consideration paid to the most urgent needs of the society, then Yale, a private institution with a $19.2 billion endowment, would arguably never receive another 50 cents.’

According to a Wikipedia entry on the billionaire Koch brothers: ‘Charles’ and David’s foundations have provided millions of dollars to a variety of organizations, including libertarian and conservative think tanks. Areas of funding include think tanks, political advocacy, climate change scepticism, higher education scholarships, cancer research, arts, and science’ (LINK). That climate change deniers and the advocates of free markets should count as the recipients of philanthrocapitalist charity speaks volumes as to the supposed efficacy of such charity in addressing the needs of the poor. It is precisely the poor of the Global South, above all, who stand to lose most as a result of the very climate change which its deniers are unwittingly enabling.

However, it is arguably when charitable donations are funnelled into for-profit enterprises that the very term itself becomes most particularly questionable. As Matthew Reiz notes in his review of Linsey McGoey’s book, No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy (2015), there is a long-standing tradition of donating money to for–profit businesses in America and it has become more pronounced in recent years. McGoey’s book gives examples of this such as the Gates Foundation’s donations to Scholastic Inc, a large publisher of education material. Another recipient of the Foundation’s money was a project called M‑Pesa, for ‘which Vodafone and its subsidiaries built, in Kenya and then Tanzania, a system that allowed villagers access to mobile phone banking’ (LINK).

As an article in The Economist put it, one of the things revolutionising American philanthropy is the ‘blurring of the distinction between the profit and the non-profit sectors. In health care, and even in education, for-profit companies are increasingly doing things that used to be reserved for non-profits. And non-profits increasingly model themselves on profit-making businesses. Business schools put on courses for voluntary workers. Non-profits hire managers from the private sector, and pay them accordingly. Some non-profits even charge for their services or spin-off profit-making subsidiaries’ (28 May 1998).

Though the sums of money involved in charity donations are substantial – in America for example, by 2016, total giving to charitable organisations had risen to $390.05 billion, 72 percent of this coming from individuals compared with 15 percent by foundations and 5 percent by corporations and the rest by bequests – it is still small by comparison with state expenditures on welfare programmes. In America, if you include both federal and local government spending, the latter comes to about $1 trillion per year. Given that only a fraction of charitable giving in the US (which itself represents only 2.1 percent of GDP) is actually targeted on the needy this further underscores the utter absurdity of such brash claims about the super-rich wanting to ‘save the world’.

Philanthrocapitalism is not about saving the world. It is about saving capitalism through a face-saving attempt to justify what cannot be justified. It is about promoting the patronising belief that the poor depend upon the super-rich when the reality is the complete opposite.

Robin Cox

Rear View: Koch & Co. (2018)

The Rear View Column from the July 2018 issue of the Socialist Standard

Koch & Co.

Socialists have long said that political parties of the left, right and centre exist to preserve the status quo. ‘The Republican and Democratic parties . . . are the political wings of the capitalist system and such differences as arise between them relate to spoils and not to principle. With either of these parties in power one thing is always certain and that is that the capitalist class is in the saddle and the working class under the saddle …The ignorant workingman who supports either of these parties forges his own fetters and is the unconscious author of his own misery’(Eugene Debs, 1904). Recent evidence supports this view. Capitalist Shri Thanedar is in the race for governor of Michigan. Differences in policy between the two main parties are of little concern to him and apparently his decision to run under the banner of pseudo-socialist Bernie Sanders is based purely on advice that Independents and Republicans are less likely to win. And, ‘the political arm of the Koch network, long reputed for championing conservative causes and politicians, has launched an ad campaign thanking a Democratic Senator up for re-election in a red state for her work in passing a financial deregulation bill’ (time.com, 4 June). The brothers are actively opposed to Trump’s tariffs and other issues of concern to capitalists.

Dumb & Dumber

The comedian John Oliver has been taken to task in a recent article (businessinsider.com, 3 June) by José Niño of the Mises Institute. Both agree that ‘socialist’ countries exist, but the advocate of a dystopia known as free market capitalism objects to remarks made by Oliver on his TV show such as there are ‘plenty of socialist [sic] countries that look nothing like Venezuela’. This country has long been the bête noire of the Institute and other right-wing groups (with the opposite being true for supporters of state capitalism) and José, unsurprisingly, adds Cuba and North Korea for good measure before insisting that price controls are an essential feature of ‘socialism’. He then delivers what he clearly thinks is his coup de grâce: ‘For those that remain skeptical about Venezuela’s socialist status, they can look no further than the second section of the Communist Manifesto, “Proletarians and Communists,” to understand the government’s true nature. Marx sums up the socialist program with ten essential tenets.’ The measures ranging from nationalisation to a heavy progressive or graduated income tax may have had merit in 1848 but not today. Indeed, Marx and Engels in their joint preface to the 1872 edition state: ‘No special stress is laid on the revolutionary measures proposed at the end of Section II. That passage would, in many respects, be differently worded today.’ Besides, as Rosa Luxemburg said succinctly: ‘without the conscious will and action of the majority of the proletariat, there can be no Socialism.’

More huff and puff from Hedges

Chris Hedges, the Pulitzer Prize-winning journalist, New York Times best selling author, former professor at Princeton University, activist and ordained Presbyterian minister, has given talks on Red Rosa –although even viewing the YouTube videos after reading a recent essay of his titled Teaching ‘Les Misérables’ in Prison (truthdig.com, 27 May) may leave you in doubt.  Hedges writes in his introduction: ‘the socialist [sic!] British Prime Minister Lloyd George said “Les Misérables” taught him more about poverty and the human condition than anything else he had ever read and instilled in him a lifelong ambition “to alleviate the distress and the suffering of the poor.”’ There follows a reasonable summary of the book and comments from some inmates, but no call for a world without the prison industry, no mention that the 99 percent worldwide remain in chains: ‘earning a wage is a prison occupation’ – D H Lawrence, or acknowledgement that ‘the paradise of the rich is made out of the hell of the poor’ –Victor Hugo.

No leaders, no led

‘I am not a Labor Leader; I do not want you to follow me or anyone else; if you are looking for a Moses to lead you out of this capitalist wilderness, you will stay right where you are. I would not lead you into the promised land if I could, because if I led you in, some one else would lead you out. You must use your heads as well as your hands, and get yourself out of your present condition; as it is now the capitalists use your heads and your hands’ ( Debs, pre-1908).

The Rich Stay Rich (2018)

From the July 2018 issue of the Socialist Standard

Part Two

Part three of our series on ‘philanthrocapitalism’

If ‘self-made billionaires’ tend to be ‘more willing to give their money away than those who inherit their fortunes’ as Bishop and Green contend then, seemingly, the prospect of philanthrocapitalism making a larger impact on society depends to some extent on a relative increase in the proportion of wealthy individuals who allegedly made their wealth in this way. In other words, on the degree to which individuals are able to become upwardly ‘socially mobile’. On current trends, however, this seems unlikely. If anything, what seems more likely is that the significance of inherited wealth is going to grow in relative terms.

What helps to sustain the myth of ‘self-made men’ is precisely the belief that we live in a socially mobile society in which inheritance plays only a negligible role. This discounting of the importance of inheritance is a characteristic feature of conservative sociological analysis and its barely concealed aim of wanting to justify the existence of gross inequalities. Such inequalities will tend to be more tolerated insofar as it is assumed they reflect the workings of a meritocratic principle. The rich are rich because of hard work, runs the argument. That’s quite true, of course, except that it omits to mention that it is other people’s hard work that made them rich.

In a sense, then, the argument about the role of inheritance in perpetuating gross inequalities is a distraction. Whether the capitalists inherited their wealth or ‘made’ it, that wealth overwhelmingly derives from that portion of the labour performed by working people that is effectively unpaid or unreciprocated. The only virtue in drawing attention to the significance of inheritance in modern capitalism is that it helps to clarify this point and make it all the more obvious.

How significant a role does inherited wealth play in modern capitalism, then? This is a difficult question to answer. Partly this is because what is called ‘inheritance’ is not simply what it is often imagined to be asLisa Keister and Stephanie Moller explain in their article, ‘Wealth Inequality in the United States’:

  ‘We know very little about how wealth is actually inherited because data on inheritance is virtually nonexistent. Indeed, Menchik & Jianakoplos (1998) estimated that between the 1970s and 1990s, as little as 20% and as much as 80% of total wealth may have been inherited. Those who study inheritance typically refer to three forms of inheritance: inheritance at the death of a parent or other benefactor, inter-vivos transfers of money and other assets, and transfers of cultural capital (Miller & McNamee 1998:3) While we typically think of inheritance as occurring at the death of the benefactor, Kurz (1984) estimated that inter-vivos transfers account for nearly 90% of intergenerational wealth transfers’ (Annual Review of Sociology, August 2000, Vol 26: 63-81).

Study after study has confirmed that, far from ‘social mobility’ in America (and elsewhere) increasing, it is on the wane (and, along with it, faith in the ‘American dream’). This seems to have gone hand in hand with the steadily widening gap between rich and poor. If you are born poor today you are more likely to remain poor than was the case with your parents or grandparents but the corollary of that is that, if you are born rich, your offspring are more likely to remain rich, too. Meaning that the role of inheritance is likely to loom ever larger as an explanation for the extremely skewed distribution of income and wealth. Consequently, if it is true that the ‘self-made’ super-rich give more to charity than those who inherit their wealth, this would seem to imply that a relative long-term decline in charitable donations from the super-rich is in prospect.

According to Thomas Piketty, author of the best seller, Capital in the Twenty-First Century (2013), the recent growth in inequality augurs a return to the ‘patrimonial capitalism’ of the Gilded Age and the dynastic wealth of a rentier economy.In America, for example, the share of total wealth owned by the top 0.1 percent increased from 7 percent in late 1970 to 22 percent in 2012. This is approaching levels of inequality to be found in the era of the Robber Barons.

What is driving this process, argues Piketty, is the simple fact that the rate of return on capital has been consistently exceeding the rate of economic growth over the past few decades, meaning the super-rich have been appropriating a steadily growing slice of the economic pie. A kind of positive feedback loop is at work which ensures that, to those who have, shall more be given, simply by virtue of the fact that they have the capital to invest which the rest of us don’t. If you are securing a rate of return that exceeds the rate at which the economy is growing, then, logically, that can only mean you are accumulating wealth at the expense of others who lack capital. Inequalities in the distribution of wealth and income will thus grow. That, in turn, acts to slow down or impede social mobility and thus boost the significance of inheritance. The recipients of this inherited wealth not only benefit directly but indirectly too by capitalising on all advantages that great wealth bestows upon them in terms of social capital, having connections with the right people and so on.

The problem is, as Piketty suggests, that while some of the super-rich might claim to have earned their wealth by the sweat of their brows, plainly the same could not really be said of their offspring inheriting this wealth. The corollary of reduced upward mobility is obviously reduced downward mobility – meaning an increased capacity for the super-rich to hang on to their huge fortunes and thus to pass them on to their heirs.

Inheritance is thus the cuckoo in the nest of capitalist ideological legitimation. With the rich getting increasingly richer at the expense of the rest, more and more discrediting the myth of upward social and intergenerational mobility, it is going to be increasingly difficult to justify their huge fortunes in the face of these stubborn realities. The disconnect between ‘merit’ and ‘reward’, which were never closely linked to begin with, will become ever more apparent.

This is where the ideological significance of philanthrocapitalism comes into the picture. It represents an attempt to shore up a failing mechanism of ideological legitimation by projecting an image of the philanthrocapitalist as a generous benefactor and of capitalism itself, as a system that can be philanthropic, working for the good of mankind  (http://philanthrocapitalism.net/about/faq/). It is the application of a fresh lick of paint on a crumbling façade that barely conceals the stark structural reality of capitalist exploitation.

Exploitation and charity

While philanthrocapitalism focuses on what the rich give to the poor it would be far more to the point to focus on what the poor give to the rich. According to Barbara Ehrenreich the appropriate response to such giving ought to be one of ‘shame’:

  ‘shame at our own dependency, in this case, on the underpaid labor of others. When someone works for less pay than she can live on — when, for example, she goes hungry so that you can eat more cheaply and conveniently — then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The “working poor,” as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect’ (Nickel and Dimed: On (Not) Getting by in America, 2001).

However, the problem with Ehrenreich’s way of framing the whole question is that it is seriously misleading. She is focussing only on the lowest paid members of the working class, those who are ‘underpaid’. The presumption seems to be that were they not ‘underpaid’ but paid at the going rate they would have no cause for grievance. Her perspective is the suppressed view of a ruling class which she faithfully echoes in talking of ‘our’ dependency on the ‘underpaid labour’ of others. She ignores completely the unpaid labour that workers in general contribute towards the accumulation of capital even when they are not ‘underpaid’. Her sympathy for the ‘working poor’ is the sentiment of a guilt-ridden liberal trying to eradicate the more unpalatable aspects of contemporary capitalism and to soften some of its rough edges.

What makes the working class – not just Ehrenreich’s ‘working poor’ – ‘the major philanthropists of our society’ is the brute fact of surplus value, the value which our class creates over and above what it receives by way of a wage. As Friedrich Engels put it: ‘It is infamous, this charity of a Christian capitalist! As though they rendered the workers a service in first sucking out their very life-blood and then placing themselves before the world as mighty benefactors of humanity when they give back to the plundered victims the hundredth part of what belongs to them!’ (The Condition of the Working Class in England, 1845).

But even if we look at philanthropy in its more conventional sense as the voluntary donation of money and effort to others, it is quite misleading to portray this as the prerogative of the rich alone. Workers likewise give handsomely in this sense.

Indeed, according to one survey, individuals with incomes below $25,000 gave away around 4.2 percent of their income while those on an income of $150,000 or more gave away around 2.7 percent. Research carried out by Dacher Keltner revealed that ‘lower class people just show more empathy, more prosocial behavior, more compassion, no matter how you look at it’ (LINK.)

Robin Cox

(Next month, concluding article: No Such Thing As A Free Gift)

The Value of Value (2018)

Book Review from the July 2018 issue of the Socialist Standard

‘The Value of Everything. Making and Taking in the Global Economy’. By Mariana Mazzucato. (Allen Lane. 384 pages. £20, hardback)

Mariana Mazzucato follows up her previous book, ‘The Entrepreneurial State’, with this fascinating look at how theories of value shape policy and economic behaviour. She reprises the core of that previous book in a chapter of this one, showing how much of the innovative success of capitalist firms in recent decades (such as the internet, GPS, etc.) actually stemmed from investment by the state, and only after the risky stage of product development did private capital swoop in to enormous rewards.

She begins with a brief history of national accounting, and how the question of the productive boundary – what is and is not a productive endeavour – gets brought into measuring these accounts. She notes that how we define this productive boundary shapes how we assess economic performance. She gives examples of difficulties: cleaning up pollution caused by industry adds to the productive side of the economy, but is actually correcting a major damage caused by cost saving by another firm. She notes that there is no economic accounting for housework and child rearing. She also points out that despite the role of the state in investing and driving innovation, the state is seen as inherently unproductive.

Her goal is not to define a new way of looking at value, but to open up the debate on why a theory of value is needed. She notes that the current orthodoxy, marginal utility theory (which essentially sees value as deriving from how useful the next additional unit of a good is, rather than how useful a good is in itself). Essentially, as she notes, this resolves into saying that the value of a good is whatever anyone is prepared to pay for it (and thus any good or services anyone pays for is productive). As a theory it abolishes any standard of value to measure prices by (it doesn’t allow for the concepts of bargains or rip-offs) and justifies the idea that markets are the most efficient measure of demand.

As she notes, marginal utility theorists maintain there is no unemployment, just a rational choice between income and leisure. As there is no measure beyond the market, it means that financial industries, that were once considered unproductive and merely distributive of wealth, can claim to be part of the productive economy. She passes into a quick mention of the idea that banks create money, with the added and helpful twist that sees that alleged ability deriving from the near monopoly of banks created by the state licensing system. This means, in effect that it isn’t private banks creating money, but the state.

She also gives a brief schematic account of the labour theory of value, and an account of Marx’ place in the history of the discussion of what is productive. She gives one of the better accounts of Marx’ theories you’ll likely find in any popular economics book. Marx noted that any activity that generates a surplus value for a capitalist was productive. What Mazzucatto misses in her account, is that Marx was clear that this was productive for capitalists and within a capitalist economy. This ‘valuable, for whom?’ is missing in most of her account, although she clearly gives hints that she would rather see a system of value accounting that gives a positive role to the state.

Her perspective is broadly Keynesian, seeing the struggle between the rent seeking of finance and the productive capacity of industry, and siding with productive capital. One aspect of her narrative that seems to undermine her case for stricter financial regulation, is that she recounts how the banks broke out of their previous regulated regime, and basically forced deregulation. Where there are profits to be made, they will be sought.

This is a useful read, and an opportunity for socialists to get involved in a debate about ensuring that the best way forward is to put an end to economic value through common ownership and the production of an abundance of wealth for use rather than exchange. We would still need mechanisms to assess resources and effective use, but we wouldn’t need a singular measure of personal wealth like a private market economy requires.

Pik Smeet

Rising land prices: another housing problem (2018)

From the July 2018 issue of the Socialist Standard

Housing is a permanent problem under capitalism basically because houses are built primarily not for people to live in but to be sold or let for profit. The private ownership of land adds to the problem in that the price of a house reflects not just the cost of building it but also the price of the land on which it is built. As land is not the product of human labour its price depends entirely on the effective demand for it, the key element in which is its location.

Land in the middle of a city is more in demand than land in some remote rural area. This is why the Duke of Westminster, who owns land in central London, figures as No. 10 in the latest Sunday Times Rich List, while the Duke of Buccleuch, who owns vast estates in Scotland and is in fact the largest landowner there, only comes in at No. 530. At a much lower level, it is why houses and rents near a tube station in London are more expensive, like for like, than those further away.

It also explains why so many decidedly far from noble property speculators are in the Rich List – these wide boys got rich by buying land at one price and selling it at a much higher one along with whatever they had had built on it. House-building in Britain is overwhelmingly in the hands of such ‘developers’ who will only build if they calculate they can make not just a normal profit but also a capital gain from the rise in the price of the land. As the Times (21 February 2017) put it:

  ‘Ultimately, building houses is not rocket science and profits are not driven as much by the cost of supplies or labour as by a company’s skill at acquiring land at the right price.’

Obviously land can’t change its location. However, its use can. Some areas of central London or near to it which have traditionally been inhabited by lower-paid workers have become desirable as places to live for higher-paid workers with jobs in the City or in government departments in Whitehall. This change has been called ‘gentrification’ but this is misleading. Historically, the ‘gentry’ were the English equivalent of the classic French ‘bourgeoisie’ whereas the higher-paid workers moving in are part of the working class in the proper sense of anyone forced by economic necessity to sell their labour power to an employer for a wage or a salary.

The higher effective demand has pushed up the price of land and so of housing there. This has had various consequences. It has provided an incentive for private landlords to improve their property so that they can let it at a higher rent, meaning that it becomes impossible for lower and even average paid workers to continue to find accommodation in the area at a rent they can afford. It has also put developers in a position to bring pressure on local councils to let them ‘redevelop’ or ‘regenerate’ the area by demolishing old, lower-rent housing to replace it by newly-built, more expensive housing.

Sweeteners

In fact so profitable is this – in terms of increase in the price of the land compared with what they paid for it –that the developers are able to offer sweeteners to local councils, in the form of providing libraries, health centres and council office space, as a way of getting planning permission, offers which cash-strapped councils cannot afford to refuse. Councils do have some power as it is them who have to give planning permission. They use this to ask that the developers include an element of ‘affordable’ housing in their scheme. They don’t do much more than ask as if they insist too much the developer will simply walk away. In any event, ‘affordable housing’, defined as up to 80 percent of the average market rent in an area where market forces have driven rents up, is still not affordable for most people.

There are also let-out clauses under which, after permission has been given and construction commenced, developers can plead ‘unforeseen’ costs or other difficulties for not being able to provide as much such housing as originally agreed, as in this example:

  ‘A developer has called on Kingston Council to remove an affordable housing clause from its development plans. The Battersea Development Company has submitted a planning application to “seek a revised affordable housing obligation” for Willow Court in Cambridge Road, Kingston.

In a letter to the council its agent states: “The affordable housing obligation as currently agreed makes the proposed development scheme unviable in current market conditions. Our client wishes to amend the affordable housing obligation”‘ (Surrey Comet, 15 June 2015).

There is ‘social’ housing – the modern equivalent of the 1890 Housing of the Working Classes Act – in the form either of council housing or of not-for-profit housing associations, both of which can charge a maximum of only 80 percent of the local market rate. These days, what’s left of council housing is generally low-quality accommodation used for housing people councils have a legal obligation to house. Housing associations, under pressure to balance their books, have begun to behave like property companies, even resorting to private landlord scams like charging a rip-off fee for renewing a tenancy contract as well as paying their top managers bloated salaries. As a Liberal Democrats candidate in the recent London borough elections lamented:

   ‘Even housing associations are now more interested in speculative development than in looking after their elderly and vulnerable tenants’ (Ham, Petersham & Richmond Riverside Comments, No. 242, February 2018).

Easily promised

Those who imagine that this particular housing problem – which is essentially an affordability problem – can be solved within the framework of capitalism offer various solutions.

One is a tax on rising land prices, or a Land Value Tax as its advocates call it. This would certainly put an end to developers (but also ordinary homeowners) speculating on the price of land rising. It would transfer the benefit of this to national or local government which could be used to reduce other forms of taxation, but it would not stop land and so housing prices from rising in the areas concerned and which make housing there unaffordable for low-paid workers.

Why not let local councils acquire the land that developers hold and use it to build houses and flats to let at a rent that lower and average paid people can afford rather than luxury flats? To many that might seem to be an obvious solution and it’s what the reformists of the Labour Party and the Green Party propose. But this is easier promised than done because under capitalism everything has to be paid for. Doing this would be hugely expensive, if only because the land would have to be acquired, even if compulsorily, at the going market rate inflated as it is by the increased effective demand for it.

Where is this money to come from? Most of what local councils have to spend comes from the central government in the form of grants (for current spending) and loans (for capital spending). House-building would be capital spending, so the councils’ debt repayment burden would go up (many are still paying off the capital plus interest for council houses they built in the past). This would be at the expense of other services unless the government increased the grants for these. But how likely is that?

As housing on the acquired land could command a higher rent than would be charged, doing this would amount to a rent subsidy for some workers. But capitalism is not a system geared to meeting people’s needs or even making things easier for people. It is a system that runs on profits under which profits and conditions for profit-making have to come first. For the past ten years governments everywhere have been committed to cutting, not increasing, state spending so as to reduce the burden of taxation on profits in the aftermath of the Great Crash of 2008 and the ensuing slump. This is not a political choice that could be reversed by a different choice, but something imposed on governments by the economic forces of capitalism that dictate that priority has to be given to profits over everything else, including social measures to benefit workers.

Even in times of boom capitalism is not a system geared to meeting people’s needs and cannot be reformed into this. This can be, and has been, attempted by Labour and reformist governments in other countries but it has always ended in tears. It is conceivable that a future Labour government under Corbyn and McDonnell might adopt a land purchase and subsidised rent scheme to deal with the problem of housing for lower and average paid workers being unaffordable in areas of rising land prices. If so, they are likely to finance it by recourse to the printing press. The resulting higher inflation and economic slowdown would sooner or later force them to do a U-turn.

The plain fact is that there is no solution to the housing problem for workers within the framework of capitalism. It will always exist, in one form or another, for as long as the capitalist system of class ownership and production for profit does.

Adam Buick