Debates. The S.P.G.B. versus the I.L.P. (1933)

Party News from the January 1933 issue of the Socialist Standard

A debate was held between the S.P.G.B. and the I.L.P. at Bethnal Green Town Hall on Friday, December 2nd. The I.L.P. speaker, N. Dunbar, claimed that the revolutionary ferment among the workers since the Bolshevik seizure of power has completely changed the problem of overthrowing capitalism. The workers have made inroads into capitalism by such achievements as unemployment insurance, and that the I.L.P. policy of Workers' Councils is the road by which the workers will achieve Socialism. The present I.L.P., since the Bradford Conference early this year, is a fundamentally different body from the old I.L.P., and must not be held responsible for its predecessor's actions.

Comrade Hardy, for the S.P.G.B., denied that the problem is essentially different from what it was before the war.

To get Socialism, the workers must gain control of the political machinery, yet the General Election last year showed the workers, employed and unemployed, prepared to vote the capitalists into power. Russia is not an instance of Socialism but of state capitalism, and in any event the I.L.P. cannot claim any credit for what the Bolsheviks did. In 1917, when Kerensky was in power and oppressing the Bolsheviks, the leaders of the I.L.P. sent this capitalist government a telegram of congratulation, urging the Russians, subject to certain conditions, to continue the war. (See Labour Leader, May 3rd, 1917.)

Social reforms like unemployment insurance, are methods by which the capitalists buy off working class discontent, with the result that unemployed riots are far less formidable than they were before the War.

The I.L.P., right from it formation, entered into electoral arrangements with the Liberal Party and had never fought elections on the simple demand for Socialism. The new I.L.P. is just like the old, a reformist body. The claim that the I.L.P. stands for any definite policy, cannot be maintained. The New Leader, for weeks past, has been publishing letters from influential I.L.P. members disputing with each other as to what the I.L.P.'s policy is?

The debate was well attended and both speakers obtained a good hearing from the audience, many of whom appeared to have Communist sympathies.

*     *     *     *

The S.P.G.B. versus the Co-operative Guild

A debate was held on Tuesday, November 15th, at Sutton, Surrey, between Comrade Ginsberg, representing the S.P.G.B., and Mr. Atkins, representing the Sutton Branch of the National Guild of Co-operators. The audience was small but interested and attentive.

A.F.

Notes on Economic History (12) (1961)

From the October 1961 issue of the Socialist Standard

Malthus on Poverty

From his law of population, Malthus infers that Governments should, on the one hand, remove all obstacles to the cultivation of the soil and, on the other, favour preventative checks, especially the postponement of marriage. The following passage from the 1803 edition is interesting: "A man born into a world already possessed, if he cannot get subsistence from his parents on whom he has a just demand, and if society do not want his labour, has no claim of right to the smallest portion of food, and in fact has no right to be where he is. At nature's mighty feast, there is no vacant cover for him. She tells him to begone and will quickly execute her own orders if he does not work upon the compassion of her guests."

Malthus therefore recommends the reduction of paupers' relief to a minimum. Money used to support the poor or destitute, he argues, us taken from the other classes in society, and especially from that section of the working class that is only just outside of destitution. For this poor relief, says Malthus, increases demand, and thus raises the price of food, clothing and shelter.

Malthus' main demand is for "moral restraint." He writes: "It is clearly the duty of each individual not to marry till he has the prospect of supporting his children: but it is at the same time to be wished that he should retain undiminished his desire of marriage, in order that he may exert himself to realise this prospect, and be stimulated to make provision for the support of greater numbers."

Arising from this, it was proposed to put legal difficulties in the way of marriage. The poor who had no prospects of being able to support a family were to be forbidden to marry.

The Malthusian doctrine attracted widespread attention, and was accepted almost without qualification by many scientists. It also made a strong impression on governments, and its effects were seen in the increased stringency of the marriage laws. Down to 1918 vestiges of this persisted in Bavaria and the Austrian Tyrol, where marriage could not be entered into without the permission of the commune.

The astonishing fact about the Malthusian theory is its persistence in face of evidence that confutes it. To go to the core of the question, we can say there is no evidence to warrant the assumption that there is any tendency in population to increase faster than subsistence. The facts stated by Malthus to show this tendency, simply show that where, owing to a small population in a new country. or where, owing to the unequal distribution of wealth, as among the working class in the old country, human life is occupied with physical necessity of existence, the tendency to reproduce is at a rate which, if unchecked, would at some time exceed subsistence. But it is not correct to infer from this that the tendency to reproduce would show itself to the same extent where population was sufficiently dense, and where wealth was distributed in such a way as to lift the whole community above the necessity of devoting their energies to a struggle for mere existence. Nor can it be assumed that the tendency to reproduce, by causing poverty, must prevent the existence of such a community: for this obviously would be assuming the very point at issue and be reasoning in a circle. And even if it be admitted that the tendency to multiply must ultimately cause poverty, it cannot be stated of existing that it is due to this cause until it is shown that there are no other causes which can account for it.

The Malthus theory has persisted, and will persist, because it does not in any way oppose or antagonise any powerful interest. It is soothing and reassuring to the class who, wielding the power of wealth, largely dominate thought. Indeed, at a time when men were beginning to question an examine society, it came to the aid of the ruling class. The Essay on Population was written as an answer to William Godwin's Inquiry concerning Political Justice, a book which dealt with the principle of human equality, and the effect of Malthus' book was to justify the existing inequality by shifting responsibility for it from the laws of society to some kind of God-given laws.

The Socialist of today still has to contend with Malthusian ideas, in a modern form. They become more prevalent in times of large-scale unemployment, and are also use as an excuse to justify poverty in such places as India, Africa, the Latin countries of America. The answer to Malthus, and the modern exponents of his teachings, is to be found in the method of ownership of the means of producing wealth.

Poverty, as dealt with by Malthus, is not in fact the result  of excessive breeding. It is the chaotic nature of the capitalist system which must be blamed. Its solution is obvious—remove the cause which the Socialist claims is the private property relation in the means of production. Make this property common property, and the common access to wealth which follows such a change will provide the answer to poverty, present or future.

Bob Ambridge

News From India (2015)

From the October 2015 issue of the Socialist Standard

Letter sent to the Calcutta paper The Statesman.

In the evening of August 23 in the Sunday Discussion Meeting of our party, the World Socialist Party (India), we read with interest the Saturday Statesman, August 22, article ‘Relevance of Marx’ written by Professor Gargi Sengupta (see here). It is really heartening to note that a nineteenth century communist revolutionary, Karl Marx, is being revisited by the 21st century mainstream press to find answers to the present-day woes and worries. Hopefully, this signals the beginning of Marx’s media-ride in India too.

This happens because, as Marx and Engels themselves observed, ‘consciousness can sometimes appear further advanced than the contemporary empirical conditions, so that in the struggles of a later epoch one can refer to earlier theoreticians as authorities’ (The German Ideology). ‘Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past’ wrote Marx in The Eighteenth Brumaire of Louis Bonaparte.

In her appreciation in defence of Marx, Gargi Sengupta has rightly claimed that ‘Marxism enables us to understand the nature of the capitalist crisis,’ and also that ‘Marx believed that human development requires a cooperative society based on common ownership of the means of production.’

She has excellently pronounced, ‘The overall significance of religion may have declined, but the family, the schools, and the capitalist controlled mass media continue to brainwash the working class and prevent them from realizing their true destiny’.

Her observation: ‘From a global perspective, a class-based analysis is still relevant,’ holds up one of the basic principles of Marxism. She defends Marx for ‘making a very fundamental contribution’ whereby ‘He placed human beings and their conscious, purposive activity – human labour – at the centre of his analysis’ and also for a ‘unique contribution’ – the role of ‘class struggle’ in ‘human historical development’. She is right in pointing out that ‘Marx’s writings still evoke interest across the world. … Marx’s writings can throw light on the problems of our age’. Simply because, as Marx viewed, ‘The nature of capital remains the same in its developed as in its undeveloped form’; and ‘Production of surplus value is the absolute law of this mode of production’(Capital, Volume I).

Actually, Marx is more relevant today than ever before.

This said, I would like to comment on a couple of inaccuracies in Professor Sengupta's article. She says, ’Marx visualized the remedy in violent revolution followed by decades of civil and international warfare.’ This is a half-truth. True, in his early years Marx held a ’violent revolution’ view. However, eventually and finally he arrived at the following conclusion: ‘Proletariat – organized in a separate political party. That such organization must be pursued by all the means which the proletariat has at its disposal, including universal suffrage, thus transformed from the instrument of trickery, which it has been up till now into an instrument of emancipation’ (written on about May 10, 1880, printed according to L'Egalité, no. 24, June 30, 1880, checked with the text of Le Précurseur).

Secondly, in portraying capitalism as only a ‘private enterprise’ system she has missed the yardstick of defining state capitalism – the defining characteristic of which is state ownership and control of the means of production and articles for distribution. As a result she is mistaken in recognizing the erstwhile so-called ‘communist’ dictatorial and despotic state capitalist regimes of Soviet Union and Eastern Europe. How could there be ‘the eclipse of communism’ when communism (socialism the same) has nowhere and never been attempted at all? Just what happened in these countries was appropriately described in 1918 by Fitzgerald of the Socialist Party of Great Britain: ‘What justification is there, then, for terming the upheaval in Russia a Socialist Revolution? None whatever beyond the fact that the leaders in the November movement claim to be Marxian Socialists’ (Socialist Standard, August 1918).

Binay Sarkar

Notes on Economic History (11) (1961)

From the September 1961 issue of the Socialist Standard

The Theory of Population

As Adam Smith's doctrine spread, it was elaborated and modified. Attempts to develop his ideas led to endeavours to explain the poverty and misery of the working class and all the defects that had become apparent during the rapid development of Capitalism, from the time of publication of his Wealth of Nations.

Two contrasted attitudes appeared. One was a condemnation and a criticism of conditions—this led to ideas about Socialism. The other was a pessimistic resignation, accepting the conditions and declaring them to be the result of the working of natural laws. This was the views held by Malthus. Malthus was responsible for two important works; in 1820 his Principles of Political Economy was published preceding by some 22 years his Essay on the Principle of Population, first published in 1798, and for ever associated with his name.

Malthus begins his statement on population with an account of the "tendency of all life to increase beyond the amount of nourishment available to it." In illustration he quotes Benjamin Franklin—"It is observed by Dr. Franklin that there is no bounds to the prolific nature of plants or animals, but what is made by their crowding and interfering with each other's means of subsistence. Were the face of the earth, he says, vacant of other plants, it might be gradually sowed and overspread with one kind only, as, for instance, with fennel; and were it empty of other inhabitants, it might, in a few ages, be replenished from one nation only as, for instance, with Englishmen." It follows from this, he says, that population has a constant tendency to increase beyond the means of subsistence.

Studying the increase of population in America, where there was an ample supply of good fertile and virgin land, and where there were few natural checks to growth of numbers. Malthus arrived at the conclusion that during about one hundred and fifty years the population had doubled itself every 25 years. The natural increase of population therefore took place like the increase in a series of numbers—1, 2, 4, 8, 16, 32, 64, 128, 256. In short, population, when its growth is unhindered, tends to increase in geometrical progression.

On the other hand, says Malthus, it is impossible to increase the produce of the soil in such a ratio. Under favourable conditions we may suppose that by improving the land already under cultivation, and by utilising the comparatively poor and neglected land, it would be possible to increase yields considerably. But the increase in twenty-five year periods (those in which population can double) could not be expected to be more rapid than is represented by the series of numbers—1, 2, 3, 4, 5, 6, 7, 8, 9. "It may be fairly pronounced . . .  that, considering the present average state of the earth, the means of subsistence, under circumstances the most favourable to human industry, could not possibly be made to increase faster than in an arithmetical ratio." To sum up, whereas population can increase in geometrical progression, the means of subsistence can increase only in arithmetical progression.

Population for Malthus, therefore, is limited by the means of subsistence. As a result of the tension inherent in the contrast between these two rates of increase, there is a tendency for population to increase beyond the means of subsistence. The result is that population increases in any country when the means of subsistence increase, whether as a result of more intensive agriculture, the import of food, or changes in the distribution of national wealth. Insufficiency of the means of subsistence, on the other hand, makes itself felt in the form of checks. These checks are of two kind—positive and preventive.

The positive checks are those which set by destroying existing population: the most obvious are wars, diseases, and famines, but they include every cause, whether arising from ignorance, vice or misery, which in any way helps to shorten the natural span of life. Preventive checks are those which are deliberately undertaken, such as refusal to marry and what Malthus calls the postponement of marriage, moral restraint. "By moral restraint I  . . .  mean a restraint of marriage from prudential motives, with a conduct strictly moral during the period of restraint."

The fact that the produce of land is uncertain and irregular was embodied in the "Law of Diminishing Returns." In the cultivation of land, assuming that the technique remains unchanged, Malthus argued that each successive addition of capital and labour applied to it beyond a certain amount (the optimum expenditure upon a particular technique) produces a smaller increment of yield. Accordingly, beyond the optimum expenditure further increments of capital and labour no longer produce equal additions of yield, but progressively diminishing ones. To put the matter in more general terms—the conditions remaining unchanged, additions of expenditure prove less profitable. If, for instance, the expenditure of 1,000 of additional capital produces an additional product of 500, the expenditure of a second 1,000 will produce an additional product of only 300: that of a third 1,000 will produce no more than 200, and so on.

This "law" has in fact been shown to be fallacious. It assumes that the productive technique remains unchanged, an assumption which is contrary to all evidence. In fact, Malthus himself says that this "law" is valid only so long as agricultural techniques remain unchanged. It would be difficult to find a period since Malthus wrote the essay, during which advanced countries' techniques of production has not been continuously changing and must, as man's knowledge increases, continue to change.

Bob Ambridge

Notes on Economic History (10) (1961)

From the August 1961 issue of the Socialist Standard

The Value of Labour-power

Adam Smith wavers in his analysis of commodities and there is confusion regarding the determination of exchange value. He determines the value of a commodity by the labour time contained in it, but then relegates the principle to older or more simpler times. What seems to him to be true about a simple commodity does not apply to the more complex forms of capital—wage labour, and rent. The value of commodities, he says, used to be measured by labour time.

There is also confusion in his analysis of commodities about which he varies regarding the determination of exchange value. He makes the exchange value of labour, wages, the measure of the value of commodities. Thus, wages are equal to the amount of commodities purchased by a stated amount of living labour, or to the quantity of labour which can be bought by a given quantity of commodities. The value of labour, or rather labour power, varies, like all other commodities, and in this respect does not differ in kind from the value of other commodities. And so value itself becomes both the measure and the explanation of value and we go round in a circle.

Marx has demonstrated the fallacy of this reasoning. He also said, very appropriately, "It is one of the chief failings of classical economy that it has never succeeded, by means of its analysis of commodities, and in particular of their value, in discovering that form under which value becomes exchange-value. Even Adam Smith and Ricardo, the best representatives of this school, treat the form of value as a thing of no importance, as having no connection with the inherent nature of commodities. The reason for this is not solely because their attention is entirely absorbed in the analysis of the magnitude of value. It lies deeper. The value form of the product of labour is not only the most abstract, but it is also the most universal form taken by bourgeois production, and stamps that production as a particular species of social production and thereby gives it its historical character."

Adam Smith also saw that profit sprang from the exploitation of labour, for he says: "The value which the workmen add to the materials therefore resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advances." But he also confused surplus value and profit.

Smith was the product of the early manufacturing period in this country. He made a valuable contribution to political economy, and was one of the most painstaking and critical of the small band who tried before Marx to find out what makes society tick.

Bob Ambridge

Notes on Economic History (9) (1961)

From the July 1961 issue of the Socialist Standard

What is Economic Life? 

Adam Smith's ideas on the development of economic life led him to make a clean sweep of all feudal ties and servitudes. The abolition of serfdom, the introduction of freedom of occupation and industry, freedom of movement, political autonomy; these were the inevitable corollaries of the new doctrine.

A demand heavy with consequences, the demand for free trade, formed a logical and essential part of the demand for the abolition of all restrictions upon production and distribution. Smith's theory of free trade was as follows:—

If trade be freed from all restraints, through the working of competition, it will come to pass in the long run that every country will produce those commodities which its natural facilities enable it to produce most cheaply. Thus there will arise a natural international division of labour, which will rebound to the maximum benefit of each nations, for each will be able to buy all it wants in the world market at the lowest possible prices: while selling there to the greatest advantage those things which it is exceptionally fitted to produce. It is the maxim of every prudent master of a family never to make at home what it will cost him more to make than to buy. (Wealth of Nations.)

In regard to the applying of these free trade principles, Smith was prepared to compromise. He agreed to the need of excise duties as a source of revenue, as also to the expediency of retaliatory duties imposed upon imports from countries whose policy was protectionist, and for duties for special purposes, for instance where an industry was judged to be essential for the safety of a country and was in need of protection. Smith, not being the dogmatist, as those who subsequently opposed his doctrines declared, was very cautious in practical matters.

Much of present day opinion of Smith's views is based upon the modifications his teachings underwent at the hands of Ricardo, and later still in the eighteen-thirties by the Manchester School of Free-traders. It is necessary to point out that Smith was not hostile to the landowning class. On the contrary, he considered that the interest of those who lived by rent was "strictly and inseparably connected with the general interest of Society" for their income increased proportionately to an increase in the general welfare.

Of the capitalist class he wrote that its interest had not the same connection with the general interest of Society as that of the landowners and wage-earners. For, he said, the rate of does not, like rent and wages, rise and fall with the booms and slumps that affect society. On the contrary, it is low in times of boom, and high in times of slump. Smith says it is always highest in countries that are going to ruin. To him, the interest of the second order, that of those who live by wages, is as strictly connected with the interest of the society as that of the landowning class. He advocated high wages and freedom of combination, but he deprecated State interference in wage contracts.

Smith's teaching brought about an entirely different way of looking at political economy. It did this, first of all, by showing investigators that the source of wealth is not a simple matter. He regarded labour as the primary source of wealth, but the conditions under which labour had to operate were of vital importance, and especially the increase of productiveness by the division of labour. Smith regarded everything from the outlook of exchange in the market, he conceived of economic phenomena as centering in exchange in the processes of "trade", and his explanation of the motive force of economics was derived from this conception.

Smith's chief contribution to economic doctrines was his neatly rounded and bold notion that economic life was a series of processes of exchange linked to each other. Herein lay such originality as he possessed. He finalised the physiocratic idea of the natural order, that is the harmonious encounter of numberless individual self-seeking economic activities. In his doctrine, exchange, the trading intercourse of separate economic agents, became the central manifestation of economic life. His system was not a theory of production, but a theory of price and value which he considered determined production just as much as distribution.

Like all economists worth considering, Smith endorsed the physiocratic concept of the average wage, termed by him the natural price of labour: "a man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more: otherwise it would be impossible for him to bring up a family and the race of such workmen could not last beyond the first generation". The fact that the development of the productive powers of labour brought no benefit to the worker is stressed by Adam Smith. Smith notes that the productive power of labour underwent no really important development until labour was transformed into wage labour, and until the means of production had taken the form of private ownership, either of land or of capital. Thus, labour's productive powers did not begin to develop until the worker was no longer able to take for himself the results of development.

Bob Ambridge

William Morris’s Red House in Bexleyheath (2012)

From the June 2012 issue of the Socialist Standard

“My work is the embodiment of dreams” - William Morris

After a train journey from London to Bexleyheath, you walk through roads of 1930’s semi-detached private housing to arrive at William Morris’s Red House. When Morris lived here this area was an open Kentish landscape of orchards and oast houses above the Cray valley near the hamlet of Upton. Morris commissioned architect Philip Webb to build the Red House. It was the need to furnish the interior of the house that led Morris to establish his textile firm and today you can now relish the aesthetic of his ‘Strawberry Thief’.

Inside the Red House Morris, Webb and Burne-Jones created a medievalist environment of furniture, stained glass, wall hangings, wall paintings, panels, embroidered panels, the impressive Drawing Room settle with miniature minstrels gallery, and murals featuring Chaucer, Malory, Froissart and Dante themes.

Ted Hollamby lived at the Red House and founded the William Morris Society but was also an important architect of post-war housing. Hollamby was Senior Architect at London County Council where it was said the department was infused with the ideas of Morris and the formalism of Le Courbusier. Later he was Director of Architecture at Lambeth Council. There was massive council house building inspired by Bevan’s  socialist” vision of new estates within capitalism where “the working man, the doctor and the clergyman will live in close proximity to each other”. The LCC and Lambeth were responsible for the design and construction of affordable, high quality housing projects such as Lambeth Towers, the Alton, Thamesmead, Pepys and Brandon Estates.

This reformist dream came to an ignominious end when capitalism went into crisis in the 1970’s. Ironically, Hollamby ended his career in the 1980’s working for the London Docklands Development Corporation where redevelopment of the Isle of Dogs was now private sector in creating homes for the corporate wealthy.

In the Studio you can find Hollamby’s book collection and Pevsner’s, but also works including Dialectical Materialism and Science by Maurice Cornforth (theorist of the Communist Party of Great Britain), Stalin’s Leninism, and Lenin articles for Iskra. The Red House used to host “impromptu CP meetings”. The CPGB adopted a reformist policy towards capitalism which was little different from the reformist Labour programme of 1945 and Bevan’s “egalitarian” vision for housing inside capitalism. Reforms to capitalism do not work in the long term. The house building of successive reformist Labour and Tory governments was eventually undone.

William Morris explicitly dismissed the whole idea of reformism in the manifesto he drafted for the Socialist League in 1885. Morris had originally been in Social Democratic Federation (SDF) but this organisation did not have the blessing of Engels, and its authoritarianism and increasing reformism led Morris and Eleanor Marx to leave and form the Socialist League. Morris died in 1896. In 1904 members left the SDF to establish the Socialist Party of Great Britain whose avowed policy is the  abolition of capitalism and the introduction of socialism not reforms to capitalism.

Steve Clayton

Notes on Economic History (8) (1961)

From the June 1961 issue of the Socialist Standard

Adam Smith's theories of Income

Adam Smith establishes an elaborate theory of the formation of value and of price, arguing that under primitive conditions, when there is little capital and when rent has not yet come into existence, the value of goods is determined solely by the amount of labour embodied in them. Things, like water, which a have a great use-value, have no exchange-value; and conversely, things with very little use-value, like diamonds, have a very high exchange-value. It follows that as the measure of the exchange-value of goods it is their "natural price" that matters. Not the utility of an article, but the amount of labour that has been expended in producing it.

In accordance with the fluctuations of supply and demand this market price swings to one side or the other of the labour expenditure price. The various items out of which the actual or market price is made up are the outcome of private property and the existing legal order, consisting of (a) wages, (b) the share payable to capital, and (c) rent, which may be regarded as interest paid for the use of land (equivalent to the difference between the price of the produce of the land, on the one hand and, on the other, the expenditure of the farmer upon wages, plus profit on his farming capital).

From this is deduced a theory of distribution, or of the formation of income (Smith uses the term "revenue"), for inasmuch as production is carried on with an eye to the market on the basis of the division of labour, the product is distributed in accordance with the laws of the formation of prices in the market. The distribution of wealth is effected in accordance with the constituents of every price; the worker receives the equivalent for his labour, and the capitalist and the landlord receive equivalent for the co-operation of capital and land.

Thus all the commodities which compose the whole annual produce of the labour of every country must resolve themselves into the same three parts, and be distributed among the different inhabitants of the country, either as wages, profit on capital, or rent for land. "Wages, profits and rent are the three original sources of all revenues as well as of all exchange-value. All other revenue is ultimately derivable from one or the other of these." Wealth of Nations (Book 1, Ch. VI).

Smith's theories on the laws of distribution may be briefly phrased as follows. rates of wages are determined, like market prices in general, by supply and demand, due to whose operation they vary to one side or the other of a subsistence wage:

The more capital there is in a country, the greater is the demand for labour, and the higher therefore are wages. The profit of capital has the opposite trend. The more capital there is, the lower is its rate of profit; the more capitalists there are, the greater is the tendency to underbid one another. Consequently, the more labour there is in a country, and the richer it therefore is, the lower in general is the profit of capital. (Book 1. Ch. IX.)

In the matter of land rent, a more complicated machinery is at work:

Increase in the productiveness of labour the division of labour and the expansion of manufacture leads to a fall in the prices of the products of industry. To the extent to which this happens, the products of agriculture automatically exchange for larger quantities of industrial products; that is, the former become dearer. This rise in agriculture prices is attended or followed by a rise in rent. (Book 1. Ch. XI.)

Rent also rises concurrently with an increase in capital, for since more capital and labour are applied to land, and land is therefore used more effectively, the income from land necessarily increases.

According to Smith economic life develops best when it is left alone. The main business of the State is to keep order. Economic activities when perfectly free develop harmoniously, and free competition must be left to do its work. Competition forces everyone to follow his own economic aims, to develop all his forces, and to produce as cheaply as possible. Consumers are supplied with goods at the lowest prices, capitalists can devote their energies to their tasks unhindered, and workers can seek employment wherever wages are highest. In this way a condition of social harmony is attained. At the same time, it results that everyone engages in the occupation which comes most natural to him. Division of labour takes place along the lines that are most economical.

By virtue of its own mechanism, society can get the better of that selfish outlook which is (primarily) hostile to society. Everyone becomes enabled, by the pursuit of his own advantage, to enjoy his natural rights.

Bob Ambridge

Notes on Economic History (7) (1961)

From the May 1961 issue of the Socialist Standard

Wealth of Nations

Since England was the first country in which modern large-scale industry developed, it was only to be expected that capitalist political economy would appear and flourish here. The introduction of spinning machinery (Wyatt 1783, Lewis Paul 1741, Arkwright 1769); the steam engine (Watt 1765 and 1770); and later of the power loom (Cartwright 1785, Jacquard 1802); and similar transformations in the methods of industrial production, indiced changes that led to an enormously accelerated growth of large scale industry.

Adam Smith was the man, who, under these conditions, established a new system of economic doctrine. Smith spent three years in France, where he became known personally to the physiocrats, and was greatly influenced by them. For ten years after his return from France, he devoted himself to economic study and to writing his book Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

Adam Smith defines the wealth of a nation in the opening of his inquiry.

The annual labour of every nation is the fund which originally supplies it with all the necessities and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

To this he makes an important reservation. Labour which is not devoted to the production of useful things, which have an exchange value is to Smith unproductive. Thus, services of all kinds are unproductive. The wealth of a nation is greater accordingly as a larger proportion of its inhabitants are engaged in useful labour. This in turn depends upon the amount of capital devoted to the employment of workers (the wage fund), but above all, upon the productiveness of labour.

According to Smith the productiveness of labour is increased mainly by the division of labour. Consequently, the division of labour is the chief cause of prosperity. He illustrates this thesis by the many processes required for the manufacture of such a simple thing as a pin. The further the division of labour is carried, the more is production carried on with a view to marketing.

Now for the purpose of the market there must develop an acceptable means of exchange, or instrument of trade—in other words, money. Money, as explained by Smith, arises out of indirect exchange. Commodities are exchanged in the market by means of money as the medium of exchange, and thus originates an exchange-value or price of goods, as distinct from their use-value. We see, then, that the division of labour is the starting point of the economic process and its development; it is the cause of the exchange of goods, for no one can live upon the product of his own activity. But exchange is effected in accordance with exchange-value (price) and the exchange value is therefore decisive (a) for the distribution of the goods, since it settles the question who can buy them; and (b) for their production inasmuch as this is guided by the expectation of the price to be realised.

Upon this premise Adam Smith builds up his economic system, and so do all the capitalist schools that follow him. The laws that regulate the formation of exchange-value are held to be also laws in accordance with which the wealth of nations comes into being; they are, according to Smith, the primary laws of economic motion.

By formulating this conception of the nature of political economy, Smith made an important step forward in capitalist theory. He gave a new turn to economic thought. Whereas both the Mercantilists and the Physiocrats had made productive circulation the basis of their reasoning, now for the first time a study of the laws of exchange-value was undertaken. Thenceforward the theory of value and the theory of prices became the basis of economic theory in general. For since prices are the determinants of the production of goods, the law of prices decides what goods shall be produced; and since prices decide which would-be purchaser has sufficient purchasing power, the laws of prices are also the laws of distribution. In a word, the laws of price are also the laws of distribution. As a result, therefore, the theory of distribution is developed as a theory of particular prices (wages, rent, etc).

Bob Ambridge

Notes on Economic History (6) (1961)

From the April 1961 issue of the Socialist Standard

The Physiocratic School

No examination of the ideas of physiocracy would be complete without a reference to those who took up and developed Quesnay's teachings. They called themselves "economites". This school acquired great influence in France. Turgot, one of the members of this group and author of an important work on on the subject of physiocracy (Reflections on the Formation and Distribution of Wealth) was appointed Controller-General of the Finances in 1774. Another of Quesnay's pupils who became political chief of the physiocratic school, was Marquis Victor de Mirabeau, generally known as Mirabeau the elder. Others were quick to espouse physiocracy in the land of its birth.

The physiocratic doctrine soon spread from France to other countries, but mage little impression in England. It had immense in Germany, where Karl Friedrich Margrave of Baden, aided by Schlettween, the most distinguished among the German physiocrats, made an unsuccessful attempt to put in practice the physiocratic principles of taxation. Leopold I, Grand Duke of Tuscany, endeavoured to introduce a "land tax" in his duchy. Joseph II, Catherine, and most of the other monarchs of the period, were affected and influenced by physiocratic ideas. The doctrine found adherents also in Italy, Poland, Sweden and elsewhere.

After Quesnay's death in 1774, dissensions broke out among the French physiocrats, chiefly because of Condillac, who insisted that commerce and industry were "fruitful" as well as agriculture, which was unorthodox to other physiocrats. The disputes that followed paved the way for the collapse of the movement. The dismissal of Turgot from office as a result of the poor condition of the State treasury, the bad harvest of 1775, the rise in the price of bread, and the bread riots all over the country, all helped this collapse.

Finally, the French revolution, bringing the birth of Modern Capitalism to France, relegated the idea of physiocracy to the realm of the past.

The ideas of the Physiocrats did not escape criticism, even in the country of its origin. Of particular interest are the works of Linquet, (Legislation on Trade, 1769) and Necker, (Grain Legislation and Trade, 1775 and the Administration of the Finances of France, 1785).

Linquet, who wrote ironically about conditions of the period, appears to defend chattel slavery against wage slavery, and ridicules all the physiocratic ideas of property. The following quotes from his writing of 1767 illustrate this. The first quotation is the answer to the physiocrats.

It is the impossibility of gaining a livelihood in any other way which forces our day labourers to till the soil whose fruits they will never eat, and our masons to raise buildings in which they will never dwell. It os poverty which drives them to market to dance attendance upon the masters who might wish to buy them. It is this which compels them to kneel before the rich, and to beg of them permission to enrich them.

And on freedom—a boast of the physiocrats:

What is this apparent liberty with which you have invested them? They can live only by renting their hands. They must find someone to rent them or die.

To the economists of his time he said this about the workers.

Do you not see that the obedience, the abjection—let us say it—of this numerous flock, is the wealth of the shepherds? If the sheep who comprise it were ever to lower their heads to the dog who herds them, would they not be dispersed and destroyed, and their masters ruined? Believe me, for his interest, and for your own, and even for theirs, leave them in the persuasion where they now are, that this cur which bays at them has more power itself alone than all they together. Let them flee at the mere sight of his shadow. Every one will be the gainer. You will find them easier to round up for the fleecing. They are more easily kept from being devoured by the wolves. It is true that this is only so they can be eaten by men. But then, that is their lot from the first moment they enter the fold. Before talking of releasing them, overturn their fold, society.

Necker in his work shows that the development of the productive forces if the workers merely permits the worker to devote less time to the reproduction of his own wages and more to the enrichment of his employer. The importance of this is that Necker derives profit and rent, the wealth of the capitalist class, from surplus labour. But he sees it only as relative surplus value, produced not by the prolongation of the working day but by a reduction of the necessary labour time. The following quote from his Administration of French Finances shows the class position of his time.

That class in society whose fate seems as though fixed by social laws is composed of all those who, living by the labour of their hands, receive the imperious law of the proprietors and are forced to content themselves with the simplest necessities of life. Their mutual competition and the urgency of their wants constitutes their dependency; and these circumstances can in no way change.

In assessing the value and place of physiocracy in any history of political economy, we must take into account the economic development of France and other countries where the doctrine was accepted. Physiocracy is first and foremost the ideas of an agricultural economy; it is the philosophy of Feudalism gradually transforming into Capitalism. Its importance fades with the French Revolution.

For us today, physiocracy can be seen as a link in the chain that leads up to, and influences, later economists. Adam Smith was influenced by it, as were several others after him. The Henry George School of modern times is also a reflection of the old physiocrats. The liberal ideas of laissez-faire, freedom of competition, likewise flow from this source.

Finally, its weakness has been shown by Marx in Volume 2 of Capital, as already mentioned in these notes.

Bob Ambridge

What about human nature? (2002)

From the September 2002 issue of the Socialist Standard

The human nature objections to socialism take several forms, but it is almost always other people, and not the objector, who are said to make socialism impossible by being incurably acquisitive or aggressive or whatever. Rarely is the objector himself or herself included among those who have these nasty characteristics.

It is claimed that it will be impossible to get people as a whole to work together to their mutual advantage because humans are by nature acquisitive. Each, it is said, will always want to get the better of the other, to grab the lion's share of whatever is going. True this does sometimes happen in capitalism, although there are many examples of people behave differently, even risking their own lives to help others.

In socialism there will be much more scope for us to help each other, and no reason for us to act acquisitively. Each will be free to take what they need from the common store, so there will be no point in anyone trying to get more of anything than their neighbour. Such behaviour would not only be unnecessary but also a nuisance. Air is free to all and nobody is stupid enough to try to store any up. the same would apply to things generally in socialism, to which access will be free, each determining their own needs. Anyone storing up much more than they need would be treated sympathetically, perhaps indulged a bit as an eccentric.

Then there is the question of whether the alleged aggressive propensity of human nature would make socialism impossible. In his book The Brighter Side of Human Nature Alfie Kohn effectively rebuts the claim that aggressive behaviour is part of human nature:

• The frequency with which national leaders have to draft their citizens into combat is powerful evidence against the idea that wars reflect natural human aggressiveness
• There is no evidence from animal behaviour or human psychology to suggest that individuals of any species fight because of spontaneous internal stimulation
• Assumptions about aggression owe much to images presented by the mass media, controlled by interests who benefit from just such assumptions
• No circle is more vicious than the one set up by the fallacious assumption that we are unable to control an essentially violent nature

Another human nature objection to socialism is that men and women are naturally lazy and will only work if they are forced to by economic or other means. Certainly the profit system encourages workers to get the best price they can for their skills, and to withhold it if the pay is too low or the working conditions too bad. But all the evidence is that healthy human beings are normally active and creative and don't relish sitting around doing nothing for any length of time. In fact studies show that people do their best work when they find it fun or enjoy doing it in the company of others, not when they are in it for the money.

Encouraging pro-social behaviour by the use of incentives or other appeals to financial self-interest doesn't work very well or works only in the short run. Capitalism tries to put a price, and to make a market, out of everything, but it also relies heavily on a tacit appeal to people being to helpful to others. The system couldn't operate without a substantial amount of “free” labour given by unpaid carers, volunteers and “good citizens”. In socialism all activities will be undertaken because someone or the community needs the product, service or experience that results. An outbreak of mass laziness is far less likely than a temporary shortage of things to do.

Then there is the “stupid” objection to socialism. The mass of people are said to be too ignorant and unteachable to enable any system that doesn't rely on compulsion of some kind to work. It is claimed that either most men and women are incapable of understanding socialism or they would never be able to run society in their own interest. Propagandists for capitalism never tell us that we are too stupid to understand the tortuous arguments that are used, for instance, to prove that the way to preserve peace is to prepare for war. The point is that the will to learn is only actively discouraged when its threat to the continuation to the continuation of the present system becomes apparent.

If most people are stupid then they must have leaders. Thus it is said to be human nature for some people to be leaders and others to be followers. The existence of leaders and the led means that only the former have the power to make decisions. But in co-operative enterprises in capitalism, and in socialism generally, the concept of leadership is foreign, since all participants have a common purpose. When you know what you want to do collectively, you may appoint or elect organisers, but you don't need somebody else to lead you to do it.

Human nature is strictly what is common to the biological nature of all human beings. It has nothing to do with possession or non-possession of knowledge. The varying capacity to acquire knowledge means nothing more than that some people learn things quicker than others. It does not prove that some are incapable of learning. Socialism will entail a world in which everyone will be encouraged to learn what they wish, for their own interest and pleasure and for the sake of the co-operative community and society in which they live.

Stan Parker

The book on the film (2015)

Book Review from the October 2015 issue of the Socialist Standard

'Mad as Hell: The Making of Network and the Fateful Vision of the Angriest Man in Movies', by Dave Itzkoff (Times Books, 2014)

In 1976, MGM released Paddy Chayefsky’s Network, a film that would change the way people saw television. It tells the story of Howard Beale, the distinguished senior anchorman of a major American network, who suffers an on-air breakdown. ‘I’m going to blow my brains out right on this program a week from today,’ he announces, explaining that he ‘just ran out of bullshit’ to broadcast. The network executives are horrified and plan on firing him, but after seeing the effect his rants had on the show’s ratings, decide to keep him on. An increasingly inflamed Beale abandons all pretence of objectivity and uses his top-rated show to whip millions into a frenzy over the injustices he sees in society. Impressed, the network commissions a slate of new programmes showcasing violent crime, terrorism, political extremism, and paranoid prophecies of doom—all with the sole purpose of channelling viewers’ fear and outrage into market share and advertising revenue.

Network caused a sensation when it was released. It was loudly denounced by television journalists, who saw it as an unconscionable attack on the nobility of their profession, but it went on to sweep the Academy Awards with a record-setting ten nominations and four wins. Despite this, the film is virtually unknown to today’s audiences—and when it is shown at all, viewers take it as a straight-up drama rather than the sly but radical comedy it was written and received as in the 1970s. As contemporary screenwriter Aaron Sorkin aptly put it, ‘No predictor of the future—not even Orwell—has ever been as right as Chayefsky was when he wrote Network.’

In Mad as Hell, Dave Itzkoff of The New York Times recounts the curious story of how a film as anti-establishment as Network ever made it to the big screen. In Itzkoff’s analysis, thatNetwork got produced at all may well have been a happy historical accident: MGM had found themselves missing out on the counterculture wave that was sweeping Hollywood, and so, desperate for a box office hit of their own, acceded to veteran screenwriter Paddy Chayefsky’s demands for total creative control over his next film. Chayefsky used this highly unusual grant of authority—which exceeded even that of the film’s director—to ensure that his dystopian world was faithfully translated from screenplay to film. That Network so pointedly attacked the medium of television was of no concern to the studio, which at the time had no relationship to any television networks apart from the occasional sale of broadcasting rights for their films. Whether MGM would have produced such a film today is another matter entirely. ‘In an age when all the major broadcast networks are now either owned by or affiliated with a motion picture and entertainment conglomerate,’ observes Itzkoff, ‘it is hard to imagine a studio turning its guns on itself the same way.’

Mad as Hell faithfully documents Network’s entire production process, from early drafts of the screenplay up to postproduction and pre-release marketing, and goes on to recount and analyze the controversy and critical acclaim the film garnered upon its release. Of greatest interest, however, is the book’s final chapter, which discusses how Chayefsky’s nightmarish vision of a world that has eroded away the distinction between information and entertainment has finally come to pass. Itzkoff attributes this to a significant relaxation in antitrust laws and federally mandated broadcasting standards, coupled with a proliferation of cable TV channels. While journalism has never been truly objective, before 1987 US broadcasters were at least nominally required to be honest and to provide contrasting views. Itzkoff explains how ‘informational’ television today is dominated by shallow, tabloid-style programming, making good use of interviews with veteran newsmen who have variously resisted and embraced the new regime.

Itzkoff is equally astute at identifying the film’s enduring contribution to popular political discourse. Though neither Paddy Chayefsky nor his mouthpiece Howard Beale are socialists, they are both acutely aware of the ills of global capitalism and of the urgent necessity of the population at large taking some sort of radical, corrective action. (‘We are right now living in what has to be called a corporate society, a corporate world, a corporate universe,’ laments Beale at one point in the film. ‘This world quite simply is a vast cosmology of small corporations orbiting around larger corporations who, in turn, revolve around giant corporations, and this whole, endless, ultimate cosmology is expressly designed for the production and consumption of useless things.’) Network, Itzkoff concludes, was all about ‘awakening its viewers to ugly and unflattering truths about their lives and the world they inhabited, and it did not communicate its messages in a subtle or soft-spoken manner: it put its most urgent and passionate ideas in the mouth of a man who at times is literally screaming them at his audience, commanding them to go to their windows and scream their dissatisfaction themselves.’ Indeed, what sets Beale apart from his countless successors—both in the film and in real life—are his perceptiveness and sincerity. He proclaims himself to be ‘mad as hell’, but he is not deranged; he is lucid and insightful, and his anger is no mere shtick. The real tragedy of Beale—and of Chayefsky—may be that they failed to offer their enraptured viewers any real solution to the problems they so effectively articulated.

Tristan Miller

Notes on Economic History (5) (1961)

From the March 1961 issue of the Socialist Standard

The Physiocrats

Although the Mercantile system was abundantly criticised, it was a long time before opposition to it became formed into a new doctrine. Such a new system of economic thought arose in France, its chief advocate being François Quesnay. He gave his doctrine the name Physiocracy—the rule of nature.

François Quesnay (1694-1774) was the son of a lawyer. He graduated as a doctor of medicine and became a physician to Madame de Pompadour and Louis XVth, His principal writings are the Economic Tables, 1758, and General Maims, 1758.

Quesnay's teaching is something more than economics; it appears to be part of a general philosophy. Setting out from the materialist notions of his time, he wanted to have social and moral phenomena regarded as being no less "natural" than physical phenomena; and the laws governing the former as well as the latter were to be seen as mechanical laws of nature.

The natural right of human beings in primitive society, he argues was the right to property—that is the right to the free disposal of goods which the individual has made or appropriated by means of his own labour. When at a later stage, men, for the better safeguarding of their natural rights, entered into the social contract, it was essential that they should not lose the right each of them had to earn his own living. Bound up in this right is another natural right of the individual—the right to foster his own economic interest and to shape his own future as best suited to him. This following of self-interest, according to Quesnay, leads to the establishment of a "natural order" in the economic association of human beings.

This doctrine of self-interest was eventually erected by Quesnay into a finished system. He endeavoured to study the laws of the economic "natural order", which were to be deduced by reason from the general plan of nature. This doctrine of "natural order" is important to him for two reasons. First, inasmuch as the pursuit of self-interest is regarded as an idea of natural right, a system of economic individualism is for the first time established. Secondly, the persons who, in their economic life, act consistently because they are guided by motives of self-interest, resemble atoms with fixed properties. The phenomena that result from their mutual contacts (in the market and elsewhere in society) are mechanically determined like those that result from the mutual contacts of the atoms. It follows, says Quesnay, that political economy, like the realm of material nature, is governed by natural laws.

To the question of what activity of the individual it is that regulates the economic machinery, and upon what foundation economic life depends. Quesnay answers—upon natural economic activities, namely agriculture. Agriculture is for him the source of all the wealth of the nation. Not money, trade, traffic and industry, but the tilling of the soil is the true source of public welfare. The former activities merely transform matter and move it from place to place; they are not creative. The agriculturist renders them possible by nourishing those who engage in them, and he supplies the raw material without which they cannot be undertaken. Commerce, industry and transport are to be considered as dependent upon agriculture.

The Physiocrats put the matter thus. The countryman gets hides, leather, and in the end his boots and other articles from his oxen; wood, and in the end his tools, from the trees on his farm; and so on. But, they said, to avoid the wasting of materials and energy, it is better that he should not himself undertake the work that transforms these basic materials, but should have it done for him by various specialists (the tanner, bootmaker, joiner, etc.) whom he must support of his agricultural surpluses.

The only productive, the only creative labour is, therefore, labour on the land. It is true that work which transforms materials derived from land, or moves them from place to place, can enhance the value of these things, but the cost of the supplementary labour is really defrayed by the agriculturist, who must feed the workers who perform it. The increase in value this produced is, therefore, according to the cost of the labour and is equal to the expense of maintaining the workers who do it. Such labour is once again covered and made good by labour on the land. The tanner, joiner, etc. who shape the raw material derived from land work merely earn their own keep in the form of wages; they make nothing new. All they do, says Quesnay, is to "add" not to "create". The agriculturist's work is a work of creation; the industrial workers perform only a work of addition, of transformation, or of transport.

Thus the class of landowners (consisting in those days chiefly of tenant farmers as contrasted with the landowning nobility) appear to Quesnay to be the only "productive" class. The land owners, on the other hand, form an "owning" or "distributive" class, while the industrialists and craftsmen comprise a "sterile" class.

These three classes are considered to be the "active" classes of the population, whilst the wage earners make up a fourth, a "passive" class, with no economic activity of its own.

Agriculture cannot continue to be prosperous, adds Quesnay, unless grain realises high prices, for only then can agriculture provide a large "net product"* and thus become able to provide large incomes for the landowning class, the manufacturers, and the working class, and in this way diffuse general prosperity. It was essential, therefore, to do away with all restriction upon the export of grain—Quesnay completely rejected the mercantilist theory of the balance of trade. The demand for free trade was an inevitable result of his views.

The Physiocratic system also gave a picture of the formation of value and of price. In certain connections Quesnay emphasized the nature of value as utility but with his doctrine of net product, value and price and derived from cost. In his view the transformative labour of industry added to goods only so much value as this labour itself consumed—only an amount of value therefore equivalent to its own cost. It follows from this that for Quesnay wages represent nothing other than the cost of replacement of the labour power that has been expended. Wages are merely the equivalent of subsistence.

Bob Ambridge

* Quesnay uses the term "Produit Nett" as signifying the surplus of the raw produce of the earth left after defraying the cost of its production.

Reagan at mid-term (1983)

From the January 1983 issue of the Socialist Standard

In November 1980 Ronald Reagan swept to an overwhelming victory in the United States Presidential election - the culmination of one of the longest campaigns ever. In addition to his two terms as Governor of California, Reagan had unsuccessfully tried for the Republican Party nomination in 1968 and 1976, his image as a right-wing extremist possibly contributing to his defeat on those occasions. The main campaign issues were inflation, rising unemployment, the crisis over the American hostages in Iran, law-and-order, and the stance taken by the incumbent Jimmy Carter on the need for energy conservation. Reagan stressed the “communist” (Russian ruling class) threat abroad (who doesn’t in American politics?) and the dire effect so-called “big government” was having on the nation’s economy. He never clearly spelled out his remedies other than calling for a massive cut in income taxes, but then, who does (we might say, who can) among those seeking political power under capitalism? Basically his fiscal policies have been those nowadays dubbed as monetarist, similar to those of Margaret Thatcher’s Tory government in Britain.

During his campaign Reagan hammered away at bureaucratic inefficiency and waste, portraying himself as an untainted outsider who would clean up the mess, defeat unemployment and inflation, and restore faith in America at home and abroad. Jimmy Carter’s task, like that of most incumbents, was somewhat harder, particularly with capitalism in recession. His tactics were to minimize critical scrutiny of his administration’s record and to emphasize Reagan’s extremist image, suggesting on many occasions that his opponent was too dangerous to have his finger on the nuclear trigger. Reagan’s acting skill was a considerable help in defeating this tactic, and the television debates screened nation-wide provided just the right setting in which to exploit this asset: one that can still win a trick or two for him after two years in office. By speech and gesture Reagan still manages to convey the image of a crusader battling against the Washington establishment. As could be foreseen he has failed to deliver the goods he promised to American workers in 1980, but despite this a recent opinion poll published by the Los Angeles Times, and quoted by Nicholas Ashford (The Times 14 October) revealed that “. . . American workers believed OPEC, Japan, big business, the trade unions and even former President Jimmy Carter, were more responsible for the recession and rise in unemployment than Reagan”.

In one of his typically emotional campaign speeches Reagan stated that “recovery begins when Jimmy Carter loses his job”, a promise particularly directed at the unemployed workers. The grim reality after two years was graphically illustrated on the television news. (BBC1). We were informed that over 11 million American workers are out of a job and shown a negro Baptist church in New York where charity is handed out to the destitute. A thousand or more are given a daily basic ration yet always supplies have run out before applicants. It was claimed that many were actually starving.

The President’s tax cut program me has also suffered a considerable setback. Congress, after weeks of bitter debate, passed a bill on 29 July 1981 to cut income tax rates by 25 per cent over 33 months, the largest reduction in United States history. Despite appearances, however, tax cuts are of no benefit to the working class as a whole. The wage or salary which the worker receives is the price which his or her labour power will fetch on the labour market. On average this is just enough to keep the worker and any dependents in a state fit to carry out the tasks required by the capitalist class. Of necessity it must be the net wage, the worker’s take-home pay, which  represents the price of labour power, otherwise the worker’s efficiency as a wage slave would tend to diminish, all other things being equal. Thus the income tax deduction on an employee’s pay slip is in fact part of the employer’s contribution to the exchequer and not a charge on the worker.

The contrary argument used by supported of tax cuts is that the extra money left in individual or corporate hands will lead to increased investment, and hence more jobs. The immediate effect of the cuts however is to reduce the living standards of the lower paid workers quite considerably as the tax reductions were made possible by swingeing cuts in spending on social security. As The Times (14 October 1982) reported: “since January of last year the poor in America have lost more than $10,000 million in federal support. Some 660,000 children have lost Medicaid coverage. Almost one million poor children no longer receive free or reduced price school lunches. One million people have been dropped from food stamp rolls. “The increased investment however has not taken place. How can there be investment without the prospect of a profit? Instead, in a sharp U-turn the President has been forced to persuade Congress, after an intense lobbying campaign, to vote in favor of a record $98,300 million tax bill intended to reduce federal government budget deficits and speed up America’s economic recovery (The Times, 21 August 1982).

Reagan has been no more successful  on the “law and order” issue. A firm believer himself in the Almighty, and given considerable support by a right-wing, semi-religious movement calling itself the Moral Majority, he made much emotional play during the 1980 campaign on how, by having the right party in government, a moral climate would be created in which the crime rate would come tumbling down. However the president was recently forced to admit (The Times, 13 September 1982) that the “US was in the midst of a crime epidemic which has touched nearly a third of American households”. A Bill now before Congress to toughen the law includes revision of the insanity defense. (Apparently reagan is particularly upset at the acquittal of his assailant, John Hinckley, for this reason. The insanity of the social system which produces such unbalanced minds has, of course, escaped him.) In any case, attempts to introduce tougher legislation have proved ineffective on countless occasions, leaving untouched the social cause of crime.

The ruthless suppression of the strike staged in August 1981 by the Professional Air Traffic Controllers Organisation (one of the few unions to endorse the Reagan ticket in 1980) is very much in the Republican tradition. It was a Republican controlled Congress which passed the anti-union Taft-Hartley Act over the veto of Harry Truman, then President on the Democratic ticket. Not that the record of the Democrats, though possibly less openly aggressive, is really much better, as was shown by the crushing of a national rail strike in September of this year. On 22 September an emergency order was approved which ordered an immediate return to work and removed the engineers right to strike for the remaining 21 months of their present work contract. The votes were overwhelming in both Houses of Congress, even so-called liberal Democratic representatives chipping in. Edward Kennedy was quoted (The Times, 23 September 1982) as saying: “The National Interest is overriding and there is not, I believe, any alternative”.

The recent mid-term elections produced just enough gains to enable the opposition Democrats to claim a substantial victory but, by and large, their gains were of debatable significance. The political system in the United States differs in a number of ways from its British counterpart. For instance, the executive (President) and legislative (Congress) branches are much more separate. In Britain, loss of a parliamentary majority almost invariably forces the government to resign; in the United States his has never happened. The 1980 elections produced a Republican Senate but a Democratic House of Representatives and, while the Democrats increased their majority in the lower house this autumn, there was no change in the Senate. There have been many instances where a President has governed without  a real deadlock with both Houses of Congress containing a majority of the opposition party. Conversely there have been occasions when the President’s party has had adequate majorities in both Houses but considerable friction has existed. Congress represents many capitalist interests spread over a large and diverse geographical area - hence they have difficulty in uniting on a common viewpoint. For this and various other historical reasons, party discipline is much more lax in the United States than is usually the case in Europe, and ad-hoc coalitions often form across party lines.

This does not however prevent the whole government machinery from acting effectively when called on, as shown by the railway strike. Here all sections of the capitalist class united against what they saw as a common threat, and decisive action was taken.

In the presidential stakes the Democrats have made little headway and, despite their mid-term gains, still seem to be in some disarray. Ronald Reagan (The Times, 14 October 1982) is the only president in recent history whose popularity rating has never fallen below 40 per cent and the most recent polls say that his popularity is on the increase again. This, linked with the poll published by the Los Angeles Times, suggests that the President, somewhat unusually for someone actually in power, has succeeded in diverting the blame onto other influences at home and abroad, In this situation the Democrats might once have hoped that Edward Kennedy would regain power for them but whatever they now do, we obviously cannot rule out a second Reagan term.

E. C. Edge

Notes on Economic History (4) (1961)

From the February 1961 issue of the Socialist Standard

Before the Physiocrats

Sir William Petty (1623-1687)

Marx, in Volume 1 of Capital, says: "Once for all, I may add that by classical political economy I understand that economy which since the time of W. Petty has investigated the real relations of production in bourgeois society, in contradiction to vulgar economy, which deals with appearances only".

This is a tribute to the genius and originality of Sir William Petty, the founder of modern political economy. It is in his Treatise of Taxes and Contribution, London 1662, that we find the first idea of surplus value.

Petty distinguishes the natural price of commodities from the market price, the "true price current". By natural price he means value. This is his main point, as the determination of surplus value depends on the determination of value itself. What, then, is value? Petty determines the value of commodities by the relative amounts of labour which they contain; he is concerned not with appearances, but with foundations.

In the following quotation from his Treatise of Taxes and Contributions we get the first definition of value:

If a man brings to London an ounce of Silver out of the earth in Peru, in the same time that he can produce a bushel of corn, then one is the natural price of the other; now if by reason of new and more mines a man can get two ounces of silver as easily as formerly he did one, then corn will be as cheap at ten shillings the bushel as it was before at five shillings, caeteris paribus (all things being equal).

The next quotation from the same work interests us, as it is the early examination of the value of labour;

The law . . . should allow the labourer but just the wherewithall to live; for if you allow double then he works but half so much as he could have done, and otherwise would; which is a loss to the publick of the fruit of so much labour.

In modern words, in receiving for six hours' labour the value of six hours, the labourer would receive double what he receives if he worked for twelve hours and got only the value of six. he would therefore not work more than six hours. Thus the value of labour is determined by the minimum necessary for subsistence. To induce the labourer to produce surplus value and to perform surplus labour, it is necessary to compel him to expend all the labour power of which he is capable, as the condition upon which he may earn the necessities of life.

Petty recognises two forms of surplus value, ground rent and money rent (interest). He divides the second from the first which, for him, as later for the Physiocrats, is the true form of surplus value. He depicts rent not as simple surplus of labour expended over and above necessary labour, but as a surplus, of the surplus labour of the producer himself over and above his wages and the replacement of his capital; as for example the following"

Suppose a man could with his own hands plant a certain scope of land with corn, that is, could dig, or plough, harrow, weed, reap, carry home, thresh and winnow so much as the husbandry of this land requires; and had withal seed wherewith to sow the same. I say that when this man has subtracted his food out of the proceed and given to others in exchange for clothes and other natural necessaries, that the remainder of the corn is the natural and true rent of the land for that year, and the medium of seven years, or rather of so-many years as make up the cycle, within which dearth and plenties make their revolution, doth give the ordinary rent of the land in corn.

To Petty, the value of the corn is determined by the labour time which it contains, while rent, equivalent to the total product after the deduction of wages and seed, equals the surplus labour represented by surplus product. Rent, therefore, includes profit which is inseparable from it.

Petty also shows that the individual character of the labour is of no consequence. Labour time is what matters.

As a final tribute, and summing up of Petty's contribution to political economy, we quote the following extract from Volume III, of Capital.

Petty . . .  and in general the writers who are closer to feudal times, assume that ground rent is the normal form of surplus value, whereas profit to them is still vaguely combined with wages, or at best looks to them like a portion of surplus value filched by the capitalist from the landlord. These writers take their departure from a condition, in which the agricultural population still constitutes the overwhelming majority of the nation, and in which the landlord still appears as the individual, who appropriates at first hand the surplus labor of the direct producers through his land monopoly, in which land therefore still appears as the chief requisite of production. These writers could not yet face the question, which, contrary to them, seeks to investigate from the point of view of capitalist production, how it happens that private ownership in land manages to wrest from capital a portion of the surplus-value produced by it at first hand (that is, filched by it from the direct producers) and first appropriated by it.

John Locke (1633-1704)
John Locke is probably better known for his philosophy than he is for his contribution to political economy. He follows William Petty in that he regarded human labour as the principal source of wealth, though Petty regarded both labour and land as the important factors. For Locke, nature was out of the prime importance. He believed that the laws of nature established personal labour as the natural limit of private property—the limit arising from the physical limitation on the amount of labour an individual can perform, and from the fact that no one should accumulate more than his needs.

Locke was opposed to the private ownership of land. In his opinion ground rent was no different from usury and, due to the unequal distribution of the means of production, was a transfer from one person to another of the profit that should have been the reward of one man's labour. The following quotation from his Consideration of the Lowering of Interest is an illustration of this:

Money, therefore, in buying and selling, being perfectly in the same condition with other commodities, and subject to all the same laws of value, let us next see how it comes to be of the same nature with land, by yielding a certain yearly income, which we call use or interest. For land produces naturally something new and profitable, and of value to mankind; but money is a barren thing, and produces nothing, but by compact transfers that profit that was the reward of one man's labour into another man's pocket.

Locke's importance is that he is the voice of the juridical theories of capitalist society as opposed to feudalism. His work in philosophy was the basis upon which the thinking of subsequent English economist rested.

Sir Dudley North (1641-1690)
Sir Dudley North is best known his Discourses upon Trade. This is mainly concerned with commercial capital, and as such is outside the scope of these notes. The importance of North is that he reflects in his writing the period in which he lived.

From 1663 to 1798, except for the years 1708 and 1709, wheat prices were falling. Landlords complained continuously about falling rents. Industrial capitalists and landowners were concerned about, and did in fact bring about, a reduction in the rate of interest. Up to 1760 it was considered to be in the national interest to maintain and increase the value of land. From 1760 onwards an economic investigation began into the rise in rents, about the increase in the price of land and corn, and of other consumer goods.

The years 1650 to 1750 were full of struggles between "monied interests" and "landed interests". The landowners gradually lost out to the money lenders and financiers of the period. The financiers, with the establishment of the credit system, and the system of State debt, became predominant in society.

Petty, in his works, refers to the complaints of the landlords regarding the fall of rents. He defended the monied interests against the landlords, and placed the rent of money and rent of land in the same category. North, in his writing, follows Petty. It was in this form that capital gave landed property its first set-back, since money-lending at interest was one of the main means for the accumulation of capital.

North seems to have been the first to understand interest correctly. He included both capital and money in "Stock". On price and money his observation that gold and silver serve not as gold and silver in themselves, but only as forms of exchange value, is, for his day, remarkable.

To sum up, the position of the economists before the physiocrats was that they had to try and understand the conditions in which the landlord was being forced out, to the advantage of finance capital which was growing.

Bob Ambridge