No Way To Save An Economy (2010)

Book Review from the April 2010 issue of the Socialist Standard

No Way To Run An Economy. By Graham Turner, Pluto Press, 2009

This is the sequel to Turner’s The Credit Crunch reviewed in last April’s Socialist Standard. The book is essentially a Keynesian tome advocating quantitative easing, low interest rates and nationalisation of the banks as a way of dealing with the onset of financial crises like the most recent one.

Much that was both positive and negative about The Credit Crunch applies here too: there are some very useful graphs and statistics presented even though the general case for Keynesianism is necessarily weak. What is more interesting is that now there appears to be a partial and belated recognition of this that creeps into the analysis as the book develops. The chapter entitled ‘Structural Causes of the Recession’ in particular illustrates something of a shift in thinking to the effect that there may be something about capitalism that is fundamentally flawed in the way Marx had argued. Some of the discussion presented at this stage isn’t bad; if there is a problem it is that too much emphasis is placed on the recent decline in the share of the national product going to labour in countries like the US, meaning that allegedly consumption and profits can only be maintained in these circumstances through the extension of credit. He hedges his bets somewhat but ultimately argues that in pursuit of profits:

‘Companies are engaged in a competitive struggle, but the compression of wages will undermine the ability of consumers to buy and absorb the goods and services being produced. The contradictions with capitalism will eventually be exposed when consumers can no longer buy all the goods being produced’ (p114).

This neglects the fact that, as Marx pointed out, it is more typical for the share of wages relative to profits to rise as the boom nears its peak and that the inability of the working class to buy back all that is produced is not the cause of economic crises (if that was the case capitalism would be in permanent crisis). Ironically, Turner reproduces a key passage from Volume II of Marx’s Capital to this effect in the Notes at the end of the book, but clearly hasn’t applied or understood this point when formulating his own analysis.

Indeed, a fair part of his discussion of Marxian theories of economic crises seems to have been adapted from writers like the late Chris Harman of the SWP. This is not entirely surprising given the SWP’s own attempts to integrate aspects of Keynesian ideas within a Marxist framework, such as with the permanent arms economy argument as an explanation of the post-war boom, one which Turner seems appreciative of.

In fairness, Turner is at least starting to ask the right sort of questions in this book, though a realisation that crises within capitalism are caused by the drive to accumulate profits in a competitive environment where there is no planning between enterprises but an anarchy of production instead, would lead him to a clearer and different conclusion. This is that no amount of Keynesian intervention, monetary reform or redistribution of income can prevent the market economy’s periodic slide into chaos.

DAP

The poverty of economics (2010)

From the April 2010 issue of the Socialist Standard

The market system failed long before the present crash.

It wasn't that long ago when the academic discipline of economics bestrode the world. Trying to grasp Adam Smith's invisible hand and understanding the workings of the market system was a respected profession. Economists moved even beyond markets, extending their empires laying claim to large parts of social science, as complex disciplines such as human psychology and sociology were reduced to little more than a matter of competing agents and game theory. There was a reason the recent bestseller Freakonomics was sub-titled the “hidden side of everything”.

But like the cobbler's children, running around barefoot, recent events have exposed the poverty of the economists' understanding of their very own intellectual backyard, the capitalist economy. Their advice on human nature or politics carries somewhat less authority now that appear incapable of explaining the credit crunch or why none of them saw it coming.

The assembled might of the London School of Economics – one of the intellectual powerhouses of capitalist ideology – was recently challenged on why the credit crunch occurred and why they weren't able to foresee it. Which intellectual giant issued the challenge? Who is it that so has their finger on the pulse of everyday concerns of working people?

During a visit to the LSE recently, Her Royal Highness the Queen (for it was she) took time out from her busy schedule to wade into the debate. The fact that she might not be the best guide to the money system (given her reluctance to dirty her hands carrying money round with her), and is probably an unlikely candidate for repossession order (at least until we get a socialist majority) was not considered relevant.

Of course she does have her head on every coin, which demands some respect, so on that basis the response to the Queen's query of the LSE's “high policy forum of 22 economic heavyweights” appeared to involve them (metaphorically) lowering their collective heavyweight heads in shame and muttering under their breath “there are no simple answers” (m'am). The blame for missing the credit crunch was placed on “a failure of the collective imagination of many bright people” – the wording of which suggests that with the usual modesty. they still consider themselves members of that group.

No longer permitted to demand their heads on a sharp stick, as many of her loyal subjects would wish, the Queen instead settled for asking what they would recommend to prevent the financial crisis happening again. Doubtless she was not impressed with the World Socialist Movement's advice in this respect, (abolition of the wages system, your Majesty), unless of course this was accompanied by a full return to feudalism, in which case she might presumably be swayed.

It should be said that we claim no greater ability to predict economic crashes, than the self-proclaimed “bright minds” of capitalism. (Those of you who remember that Enron executives used to call themselves “the smartest guys in the room”, and the whole banking sector seemed to consider themselves “masters of the universe” may see a pattern emerging in how capitalists have grossly inflated views of themselves, not just their investments). Our view is that crashes are inherent to the system and are inherently unpredictable. If they were predictable, investors would act accordingly and make it unpredictable again.

There is nothing wrong with trying to understand capitalism, as long as the intent is to get rid of it. If you want to study the economy to try and make it work, you might as well read tea-leaves, or – better still perhaps – the scattered intestines of sacrificed investment bankers.

So what was the recommendation of the economic intellectuals to this royal command? In a squirming, obsequious response they said they saw no merit in using existing policy mechanisms which had all clearly failed to contain the market (a revolutionary view world socialists would share). More disappointingly they instead made a tentative modest proposal of her royal highness: that it would help everyone if she were to ask her ministers for a monthly update.

They go on: “ There is a need to develop a culture of questioning, in which no assumption is accepted without scepticism and a sufficiently broad array of outcomes is considered”. This is a pretty good summary of the scientific method. Economics has always resented the “dismal science” tag thrown its way. With the admission above from its highest priests, it could be argued that economics is some way from even laying claim to being a science, dismal or otherwise.

We would agree with the economists where they warn the Queen that “it is a dangerous conceit to believe that economic cycles can be eliminated”. But the wording suggests that this is some sort of human failing rather than the inherent flaw of a system that is – it should not be forgotten – just one option available to help humanity make its most critical decisions (that is production of things humanity needs). Indeed the economists continue “if you have a series of relatively buoyant years...not only do humans get flabby, also the feeling 'we've cracked that' is all too easy to spread. It is human nature”.

So there you have it. All of you who thought over the last 10 or 20 years that “you'd cracked it”, are to blame for getting “flabby”. And besides, it’s all conveniently in your genes anyway, didn’t you know? In future we can rest assured however – the Queen is on the case now.

Over the next few years of promised increased austerity – as hospitals close, schools fall apart and houses get repossessed – let us not forget that these hucksters, chancers and charlatans are the people who claim to be in charge of capitalism. But the market failed long before it crashed. Leave decision-making to others, we are told. Leave it to the bankers and the “bright minds”. Leave it to the economists and the politicians. Leave it to the capitalists and even our own royal relic of feudalism. They all still expect you to let them make the decisions. Fortunately, year by year, fewer of us remain quite so willing.

Brian Gardner

Weekly Bulletin of The Socialist Party of Great Britain 142

Dear Friends,

Welcome to the 142nd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1564 friends!

Recent blogs:

Tony Blair and the Chilcot inquiry

What is Real Democracy and How Do We Get It?

What’s Wrong with Using Parliament?

Quote for the week:

"Democracy means simply the bludgeoning of the people by the people for the people." Oscar Wilde (attributed)

Continuing luck with your MySpace adventures!

Robert and Piers

Socialist Party of Great Britain

Q & A: What is common ownership? (2010)

From the April 2010 issue of the Socialist Standard

What is Common Ownership?

Quite simply, the common ownership of the world’s resources and productive capacity is the basis for a reorganisation of society that would ensure plenty of the necessities of life for everyone on the planet – no more starving, malnourished people, no wandering homeless, no senseless deaths for the want of easily affordable medical care and medicine, no more poverty, unemployment, or inequality. How can this be so? Surely, if it were possible to eliminate these scourges we would have done it long ago. Aren’t we working on these problems anyway?

At present we live in a world where the resources of the Earth and the products made from them, the processes needed to make them, and the transportation systems to get them to you, are all owned by private individuals. A company proposes to extract resources or manufacture commodities. It needs money in order to do this. Wealthy people loan the company the necessary capital, but they don’t do it for nothing. They will expect a healthy return on their money every year of say, 10 percent, or £100 000 on every million pounds loaned. If this return is below expectations, then the lenders will withdraw their funds and look somewhere else to invest.

This puts every enterprise in a competition for capital to fund their operations and for expansion. Thus all companies must compete and strive to do whatever is necessary to create profit to pay dividends to lenders. If a company fails in this, capital will dry up and production will stop, rendering its physical assets as junk or sold at a fraction of their value, and its employees will be out of work. In other words, commodities are only produced for the purpose of profit or they are not produced at all.
The profits go to a tiny minority of big investors of capital to enhance their already vast fortunes that allow them to live in luxury while contributing no work whatsoever.

We believe that the Earth’s resources are the common heritage of all mankind and should be managed for the benefit of all. Those resources are easily abundant enough to feed, clothe, and house everyone on earth and provide medical care, education and everything else necessary to ensure a full and happy life for every one.

The establishment of common ownership would eliminate the competition for resources and for capital. It would eliminate production for profit. It would eliminate the need for states and their central governments that exist to serve today’s competitive system. It would even eliminate the need for money and trading as goods and services would be produced solely to meet the needs of humans who would have free access to those goods and services, taking them as needed. Competition would be replaced by cooperation, eliminating conflict and war and because everybody and therefore no one person or group would own the means of producing wealth, everyone would stand equal to the powers of production – no owners and non-owners, no exploiters and exploited, no employers and employed, and therefore, no classes.

Today, this is quite obviously not the case. We have constant conflict and war, vast inequality, poverty, malnutrition, starvation and deprivation amid wealth and plenty. Workers produce all the wealth in the world and perform all the work, yet are only allowed to take home a small share of that wealth to enable them to exist so they can show up at work the next day to produce more profit that goes to the already wealthy. And they are only allowed to do so at the whim of that tiny minority of owners.

Today, nobody starves or goes hungry because we lack food. Nobody is homeless because we lack building materials or builders, nobody lives in poverty because we lack wealth. People suffer theses scourges because they are unable to pay and thus realize a profit for some enterprise or other. In one fell swoop, in one simple action, production for profit could be replaced with production to satisfy the needs of all.

Cooking The Books: A Nobel Prize for Marx? (2010)

The Cooking The Books column from the April 2010 issue of the Socialist Standard

“If Karl Marx and V. I. Lenin were alive today, they would be leading contenders for the Nobel Prize in economics”, wrote Paul Craig Roberts, former editor of the Wall Street Journal and an Assistant Secretary of the Treasury under Reagan, in an article on Counterpunch last year.

“Marx”, he added in explanation, “predicted the growing misery of working people, and Lenin foresaw the subordination of the production of goods to financial capital's accumulation of profits based on the purchase and sale of paper instruments.”

Lenin first. He didn’t write much on economics but the two books he published on the subject are not too bad. Both rejected “underconsumptionism”. The first, The Development of Capitalism in Russia (1899) was a refutation of the Narodnik view that capitalism could not develop in Russia because of a lack of markets. The second, Imperialism, the Highest Stage of Capitalism (1916), argued that the imperialism that characterised the thirty or so years till the WWI was caused by profits in colonies being higher than at home. (The nonsense about some workers in the imperialist countries sharing in the exploitation of the colonies was only added in the introduction to the 1920 French and German editions). It was heavily based on a work, Finance Capital, A Study in the Latest Phase of Capitalist Development (1910), by the Austrian Social Democrat Rudolf Hilferding. So, if anyone deserves a Nobel Prize for analysing financial capital (at least in continental Europe) it would be Hilferding rather than Lenin.

As to Marx, he did write of the “increasing immiseration” of the working class as capitalism developed, but he did not intend this to be understood as the whole class necessarily becoming worse off materially. “Misery” included the quality of life and work and social factors such as the gap between rich and poor and not just the quantity of goods consumed. So misery could increase along with increased consumption. If Marx had meant “increasing pauperisation” (a view long supported by the old Communist Party) then he would have been proved wrong and so be out of the running for a Nobel Prize.

Even so, Roberts wrote that the working class in America is now materially worse off than it was twenty years ago:

“In this first decade of the 21st century there has been no increase in the real incomes of working Americans. There has been a sharp decline in their wealth. In the 21st century Americans have suffered two major stock market crashes and the destruction of their real estate wealth. Some studies have concluded that the real incomes of Americans, except for the financial oligarchy of the super rich, are less today than in the 1980s and even the 1970s. I have not examined these studies of family income to determine whether they are biased by the rise in divorce and percentage of single parent households. However, for the last decade it is clear that real take-home pay has declined.”

The explanation he offers is “financial capital’s power to force the relocation of production for domestic markets to foreign shores. Wall Street’s pressures, including pressures from takeovers, forced American manufacturing firms to ‘increase shareholders’ earnings.’ This was done by substituting cheap foreign labor for American labor.”

There could be something in this but there’s no way of reversing it. Capital will always flow where the profits are highest. That’s its nature.

Editorial: Who are ‘we’? (2010)

Editorial from the April 2010 issue of the Socialist Standard

Listen to almost anyone talking on the radio or television and when pontificating on the troubles and problems of the world, they all, without exception seem to default to the ‘we’ word.

Recently Gordon Brown, although frankly it could have been any of the party leaders, explaining how ‘we’ must make sacrifices and enter a new era of austerity if 'we' are to resolve the current economic crisis. On another programme, probably Sunday Worship or a similar few minutes of escapist ministry, it appeared again as the minister chastised his congregation saying how ‘we’ must not be selfish and how ‘we’ must think of others. It is astonishingly conveniently how the term ‘we’ can be substituted for the word that seems to have escaped all those who turn the ills of the world inward on themselves or their fellow men or women. The correct word is, of course, society; or probably, to be more precise, the existing society.

We human beings are not inherently selfish; we are not inherently warlike; we would not in a natural state of affairs allow children to starve, even singly, let alone in their thousands. We would not pollute and damage our oceans in the full knowledge that within the next 30-40 years they would be almost devoid of edible fish. We would not cut down vast tracts of primary rain forests knowing that the loss of this forest will detrimentally affect the very planet we live on. We would not expend vast amounts of material and energy on the manufacture of devices whose sole purpose is to kill and maim other human beings, other ‘we's’. It is so convenient to ascribe the hard-to-face, awful and terrifying things that are perpetrated throughout the world to an abstract ‘we’. ‘We’ are not, as individuals, responsible for these ills and the sooner, when referring to what is wrong with this system, the word 'we' is dropped and replaced with ‘this society’ then perhaps all those poor people who after slogging hard at work all day and who are made to feel wretched and guilty and who are accused of contributing. through their avarice, greed and selfishness, to almost every shortcoming of this obsolete and dangerous society, the better.

If 'we' can be used to good effect it will be when 'we' realise the wonderful and great future humanity could achieve if ‘we’ united and stopped voting for left or right politics and voted for a new politics, straight ahead politics – true world socialism.

Capitalism breeds inequality (2010)

From the March 2010 issue of the Socialist Standard

A recent report shows that the reformist actions of the Labour government have not been able to reverse the inequalities that capitalism generates.

Minister for Women and Equality Harriet Harman, who won the Labour Party deputy leadership by talking up left wing and egalitarian credentials, set up a National Equality Panel to look into inequality in UK society, and report back. That the report, An Anatomy of Economic Equality in the UK (summary at the following link), has come out in the period of the run up to a general election, at which Labour are desperately trying to cling onto their heartland support and produce clear red water between themselves and the Tories, is surely purely coincidental.

Some of the information this panel has produced is extremely useful and well worth reading. Although it mostly contains data that has been made available elsewhere, its focus on equality is thoroughly worthwhile and it does draw all of the current knowledge on the state of equality in the UK into one place. This graph, for example, tells a sorry tale:
Graph 1: Full-time weekly earnings at 2008 prices, 1968 to 2008, men



Source: NEP, based on 1968-1996 New Earnings Survey (NES) (GB),1997-2008 ASHE (UK).
Not only, as the headline writers all noticed, has the gap between the top and bottom earners widened over the last forty years (quite radically) but also it has risen quite markedly as compared to median earnings. What is most startling of all is that the lowest paid workers have barely gained any substantial increased over all that period. So much for the idea propounded by Tories of the ‘trickle down effect’ of gains for the rich becoming gains for the poor. Likewise, so much for the social democrat notion that growth of the economy overall will abolish poverty. Through most of that period, the British economy has grown, and clearly only grown to the benefit of those at the top.

To be fair to Labour – and this has been noted for much of their time in office – what they have achieved is a slight slow-down in the growth in the gap between rich and poor. Much of the reason they can do no more than that is down to the changes in the economy since the 1970s, with the transfer of productive industry to the power houses of east Asia. Further, structural unemployment has persistently remained since the late 1970s effectively preventing any remedy through the labour market. As the BBC’s Mark Easton notes: “The problem for the politicians is that measures to reduce social or income inequality will always be controversial because they mean neutralising the advantages of wealth – a prospect that those with money and influence will fight hard against.” ('Is Inequality Iniquitous?')

Labour has struggled to try and create conditions of social equality, but cannot and will not act against the very structures and systems that create it. It is like someone campaigning to mitigate the effects of slavery without trying to abolish slavery itself.

What the report shows, but does not foreground, is that the top 1 percent of earners earn over £2,000 per week. Indeed, it is notable on the graph of incomes, that there is a sudden and noticeable spike at the top end of the graph, reflecting the small number of people who have astronomical incomes.

Graph 2: Half of the population has income below and half above £393 per week

The chart below demonstrates this further – the top 1 percent have more than double the income of those at the start of the top 10 percent of earners.

Graph 3: People at the cut-off for the top tenth those at the cut-off for the bottom tenth. The top times the median.

Source: DWP, based on HBAI dataset. Incomes are adjusted no children. For a single person, divide actual net income 1.2; for a couple with 2 children under 14, by 1.4 etc (allowing and 0.33 for children aged 14 or over, or additional adults

This of course is income; the statistics on total wealth are worth noting as well:

“Median total wealth (including personal possessions, net financial assets, housing and private pension rights) is £205,000. The 90:10 ratio is almost 100, with the top tenth of households having wealth above £853,000, and the bottom tenth having less than £8,800. The 90:10 ratio is so high because the poorest households have such little wealth. However, even looking more narrowly at the top half of the wealth distribution, those in the top tenth have more than 4.2 times as much wealth as those in the middle, twice the corresponding ratios for earnings or household income. 1 per cent of households has total wealth of more than £2.6 million.”

The authors of the report clearly advocate reducing inequality. They address the various philosophies that claim that social inequality is necessary or even just. They maintain, though, that international comparisons of economic output do not correlate to great inequality, and that some much more equal societies than Britain are more productive and succesful.

Further, it’s clear that the inequalities they discover do not relate to life choices, but in fact reflect the cumulative effects of various advantages and disadvantages produced by background, and yes, class. Although most of the differences they highlight are between different parts of what we would understand as the working class (anyone whose main economic asset is their ability to work) the conclusion that inequality at birth stays through life remains a stark and significant fact.

Most tellingly of all is their revelation that the share of wealth for the top two thousandth of the population (the very, very, very, rich) is back to where it was in the 1930s. Thos gap narrowed towards the 1960s, but since 1969 their share of ‘post tax’ income has trebled from 0.5 percent to 2.5 percent. For the top 1 percent they have gone from 4.7 percent in 1979 to 10 percent by 2000. Put another way, a century of Labour and Labour governments has not dented the power and wealth of those at the top of society. That, as opposed to any specific failure of the current Labour administration, is the lesson that socialists need to draw from this report’s findings.

For those who would deny that inequality is a problem, it must be sufficient to show that inequality in wealth and social status translates into a shorter, iller life, with less knowledge and personal development. The findings of this report must not be allowed to lie gathering dust on political correspondents and professional politicians’ book cases, but must be made a spur to show the rotten truth of our present system of society, and become a weapon in the arsenal of overturning it in its entirety.

Pik Smeet

Weekly Bulletin of The Socialist Party of Great Britain 141

Dear Friends,

Welcome to the 141st of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1565 friends!

Recent blogs:

An inconvenient future

Eat shit and die!

Capitalism breeds inequality

Quote for the week:

"Under private property ... Each tries to establish over the other an alien power, so as thereby to find satisfaction of his own selfish need. The increase in the quantity of objects is therefore accompanied by an extension of the realm of the alien powers to which man is subjected, and every new product represents a new potentiality of mutual swindling and mutual plundering." Marx, Human Requirements and Division of Labour, 1844.

Continuing luck with your MySpace adventures!

Robert and Piers

Socialist Party of Great Britain

Voice From The Back: Capitalism is worldwide (2010)

From the March 2010 issue of the Socialist Standard

CAPITALISM IS WORLDWIDE

Members of the working class are taught in schools from a very early age that the country they were born in is somehow special. We are taught to be proud of the country wherein for generations our family has been exploited. We wave flags, sing patriotic songs and are taught to mistrust workers from other countries. The owning class suffer from no such xenophobia. They are prepared to exploit workers of any nationality, creed or so-called race. To them profit is much more important than patriotism. Here is a recent example from the Brighton College newspaper. "Workers at a Sussex-based electronics firm were today left "devastated" after being told in a video message that manufacturing at their factories is to end and 220 jobs moved to Korea and the Czech Republic. Unite said Edwards planned to cease all manufacturing at its Burgess Hill and Shoreham factories. The announcement was made to employees via a video message, which the union said was "tactless"." (The Argus, 13 January)

A GRATEFUL NATION

Capitalist nations are continually in conflict with their rivals and inside capitalism economic rivalry leads to military action. During these actions the press praise "our boys" in uniform and regale us with tales of heroism. Nothing is too good for "our boys" they claim, but the reality is far different. "Britain's military veterans are too often descending into alcoholism, criminality or suicide because of a lack of support from the Government according to the Mental Health Foundation. Veterans under 24 are two to three times more likely to kill themselves than civilians of the same age. An estimated one in five veterans and Service personnel is said to have a drinking problem. The charity said: “More needs to be done to help veterans stay well." (London Times, 28 January) Having risked life and limb in pursuing the interests of their masters in these hellish conflicts the heroes of yesterday are thrown on the social scrapheap.

CLASS DIVISION

Socialists are often pilloried because we look at the world from a class perspective. We are accused of being outdated, old fashioned and living in the 19th Century. All that Marxists stuff about class division has been outdated by the new dynamic capitalism of the 21st Century we are told by our critics. A recent government sponsored health review seems to give the lie to that notion. "Healthy living is cut short by 17 years for poorest in Britain. The poor not only die sooner, they also spend more of their lives with a disability, an "avoidable difference which is unacceptable and unfair", a government-ordered review into Britain's widening health inequalities said yesterday. ... Not only is life expectancy linked to social standing, but so is the time spent in good health: the average difference in "disability-free life expectancy" is now 17 years between those at the top and those at the bottom of the economic ladder, the report says." (Guardian, 11 February)

MOTHER OF THE FREE

At the last night of the Proms exploited members of the working class like nothing better than to bawl out the words of Land of Hope and Glory. Poor, deluded workers image that there is something superior about being born on a piece of dirt thrown up on the Atlantic Ocean. They never realise that it is an accident where you happen to be born, and indeed that it was probably an accident that they were born at all. This misguided nationalism is fostered by governments and the media. Britain is superior to Johnny Foreigner with his deceitful regimes. No underhanded politics in dear old Britain says the patriot critical of foreign powers, but what is the reality? "MI5 faced an unprecedented and damaging crisis last night after one of the country's most senior judges found that the Security Service failed to respect human rights, deliberately misled parliament, and had a "culture of suspicion" that undermined government assurances about its conduct. The condemnation by Lord Neuberger, the master of rolls, was drafted shortly before the foreign secretary, David Miliband, lost his long legal battle to suppress a seven paragraph court document showing that MI5 officers were involved in the ill-treatment of a British resident, Binyam Mohamed." (Guardian, 11 February) Yet another example of how the quest for markets soon overcomes any ethical scruples. Not so much a case of Britain Rules The Waves as Britain Waives The Rules.

It’s about all of us

Cross-posted from the World Socialist Party of the United States website

In an article Peter Rachleff, a professor of History at Macalester College in St. Paul, reminds us of some statistics concerning the USA.

Between 1979 and 2005, the mean after-tax income of the top 1 percent of income earners rose 176 percent while that of the lower half rose less than 10 percent. In 1970, the average CEO earned forty times as much as the average worker. By 2010, it has become nearly 400 times.

80 percent of all the wealth in the U.S. is owned by the 10 percent at the top of our economic ladder, with some 38 percent of the wealth the property of the top 1 percent alone. The bottom 90 percent of the ladder has to share only 20 percent of the wealth.

“American workers have long organized in unions to gain a share of their productivity increases, assure fair treatment on the job, expand benefits, and lay a foundation for a secure retirement…For two generations, workers purchased cars and homes, sent their children to college, and enjoyed a genuine retirement…As the unionized percentage of the workforce shrank from 30 percent in the 1950s to 20 percent in the 1980s to little more than 10 percent in the 21st century, unions’ ability to defend their members’ wages, benefits, work rules, job descriptions, and rights on the job melted away…” Rachleff writes.

But he also describes that a union can fight back. Its success rested on the ability to make their struggle about “all of us.” To adopt an encompassing approach which pulls together its diverse membership , that builds alliances with the community and organises the support of other unions.

The WSP’s advice to workers would be :-

1 ) Try to push wages and salaries as high as they are allowed to go by the owners and management.

2 ) Organise democratically to achieve your aims, without reliance on leaders, who will often sell you down the river.

3 ) Recognise that any union struggle is necessarily a defensive one as there can be no real and lasting victory within the profit system. So ready yourselves for the inevitable next battle.

Alan Johnstone

Marxism. Last Refuge of the Bourgeoisie? (1985)

Book Review from the January 1985 issue of the Socialist Standard

The important part of the title of this posthumous work by Paul Mattick (he died in 1981) is the question mark, since Mattick did not regard Marxism as "bourgeois" at all. He did, however, want to explain how "Marxism" had become an ideology of regimes and movements which had absolutely nothing to do with Marx's aim of a classless, stateless, wageless world community.

The first part of the book is devoted to a discussion of Marxian economics, where Mattick sets out to explain why so many academics have come to imagine themselves as Marxists without having understood at all what Marx's aim was. Thus many learned works have been published on value and price, and the so-called problem of the “transformation" of the one into the other, without the authors understanding that Marx aimed at the abolition of the price system and that for him "value was a historical category [that] is bound to disappear with the ending of capitalism" Clearly, the "transformation problem" fades into insignificance in the face of a proposal to abolish both price and value. Similarly, those academics who use Marx's ideas to make policy recommendations to governments have failed to realise that "Marxian theory aims not to resolve 'economic problems' of bourgeois society but to show them to be insoluble". As Mattick puts it, “Marx was a socialist, not an economist".

When Mattick writes about Marxian economics. therefore, he is on the same wavelength as us, even if we can't always agree with him. As, for instance, over the supposed economic breakdown of capitalism which Mattick believed in for the whole of his political life and which he still, in this, his last book, expected to finally spark off the socialist revolution.

The second part (which is more lucid and can be read separately before, or without, the more difficult first part) deals with "Marxism" as a political and ideological movement. Here Mattick has some very pertinent things to say, pointing out that German Social Democracy in its heyday before the First World War saw socialism not as the abolition of the wages system and the control of production by the producers, but as the control by a democratically-elected government of the one Great Cartel towards which they saw capitalism tending.

This state-capitalist conception of "socialism" was later abandoned by them (in favour of a frank acceptance of the mixed private/state capitalist status quo) but was inherited, and to a large extent achieved, by the Bolsheviks. The Russian revolution, says Mattick, was "a sort of bourgeois revolution" in which "the historical functions of the Western bourgeoisie were taken up by an apparently anti-bourgeois party". And the following comments could just as easily have come from us:

"The Bolshevik regime had no intention to abolish the wages system and was therefore not engaged in furthering a social revolution in the Marxian sense..."
"...The capitalist system was modified but not abolished. The history made by the Bolsheviks was still capitalist history in the ideological disguise of Marxism."

In this way "Marxism" became the ideology of state capitalist regimes, a theory of the totalitarian control of society by a minority, whereas Marx had always stood for a society without classes and without any machinery of coercion. It is a pity that there will be no more books from the pen of Mattick to make this point.

Adam Buick

Cooking the Books: Empty Hope (2010)

The Cooking the Books column from the March 2010 issue of the Socialist Standard

“Fresh blow to hopes of consumer-led recovery as squeeze tightens on pay” ran the headline of an article in the London Times (21 January) by Gráinne Gilmore, reporting on official figures for wage growth in the three months to November:

“Average pay excluding bonuses rose at an annual rate of 1.1 per cent for the period . . . Private sector staff saw no pay rise at all in November. . . Analysts said that companies were cutting workers’ hours and pay to try to limit redundancies . . . Colin Ellis, European economist at Daiwa Securities, said: ‘The lack of any pay increase in the private sector will weigh on consumption during 2010, much as weak wages have in Germany.’”

She didn’t say who was hoping for a “consumer-led recovery” but this was always an impossible dream. As should be clear from her report, consumer demand depends largely on what people are paid. In other words, it is largely made up of what wage and salary workers have to spend. Which depends on the level of employment; which in turn depends on what those who own and control productive enterprises (or who act for them) decide to produce according to what they think are the prospects of selling it profitably.

The economy, and its ups and downs, is not driven by consumer demand, but by capital accumulation, i.e. by profits being invested in expanding production. The ups and downs of consumer demand in fact reflect, not cause, the ups and downs of the economy. Paul Mattick put it well in his Marx and Keynes: “The business cycle is not caused by variations in social consuming power, particularly not that of the workers; rather the cycle determines these variations”.

When production is expanding so is employment and income from employment. Workers have more to spend and, on the basis of the assumption that their employment is secure, are able to borrow against future expected income and so can spend even more. Some economic observers, perhaps influenced by what they were mistaught in college about capitalism being a system of production for consumption, jump to the conclusion that it is this increased consumer spending that is causing the economy to grow. But this is an illusion. Consumer spending is booming because the economy is booming, not vice versa. This becomes clear when the economy stops expanding, as it did in the second quarter of 2008 and in fact began to contract. When this happened consumer spending fell too.

Consumer demand will never recover of its own accord. How could it? Workers can’t simply spontaneously increase their income. It will only revive when production and employment do. And that depends on the prospects of profitable production reviving. Which the squeeze on pay Gilmore reported on will in fact be contributing towards.

Capitalism is a system geared to profit-making, not to meeting needs, not even to restricted, paying needs.

Weekly Bulletin of The Socialist Party of Great Britain 140

Dear Friends,

Welcome to the 140th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1562 friends!

Recent blogs:

The Price of Everything

Thicker than water?

Ethics

Quote for the week:

"The founders [of the United Nations] sought to replace a world at war with a world of civilized order. They hoped that a world of relentless conflict would give way to a new era, one where freedom from violence prevailed…. But the awful truth is that the use of violence for political gain has become more, not less, widespread in the last decade." Ronald Reagan, 26 Sept 1983.

Continuing luck with your MySpace adventures!

Robert and Piers

Socialist Party of Great Britain

"The Road to Socialism - Kropotkin, Morris & Marx"

A transcript of an old talk from one of the speakers which may be of some interest to those interested in the subject of the debate:

What Marx should have said to Kropotkin

Football Fortunes

Cross-posted from the Socialist Courier blog

Every day in the newspapers and on television we are told of the fabulous incomes of some of the footballers in the Premier League. Some are reported to be earning £140,000 a week.

To most workers this appears a fortune and yet it is chicken-feed compared to the immense wealth of people like the Russian multi-millionaire who at present owns the Chelsea football club. Of course the majority of professional footballers have to struggle by on more ordinary incomes like most workers.

At the other end of the scale from the well-heeled Premier footballers and the millionaire owners we have the poor makers of the footballs. "The city of Sialkot in Pakistan produces as many as 60 million hand-stitched footballs in a World Cup year. The firms here are running out of new workers since child labour was abolished. Western buyers may have a clear conscience, but the children of Sialkot now toil in the local brickworks instead. ...Shaukat is a strong, 20-year-old man. He has been working for this independent stitching factory, Danayal, for eight years. Danayal produces handmade footballs for professional leagues. ...At the entrance to the factory there's a notice board showing the current rates of pay. Depending on the model, his employer pays between 55 and 63 Pakistan rupees per ball ($0.65 to $0.75). "On a good day I manage six balls," says Shaukat. That's eight hours work. "That's not a lot of money," he says as he pushes a needle through the thick synthetic leather and stitches together two patches. His boss is standing close by so he quickly adds: "But it's not little either." He gets paid every Saturday and has to feed a family of six with his wages.". (Spiegel on line, 16 March)

That is how capitalism operates - immense wealth for the millionaire owners and penury for the working class.

Richard Donnelly