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Crises, Catastrophy and Mr. Strachey
DID Marx really believe that crises would be so catastrophic in their effects as to ensure the economic collapse of Capitalism? It is a convention of many of his critics and the so-called Marxist revisionists to say he did. None of them have ever given substance to their assertions with any worth while evidence.
It is true that the young Marx in Wage Labour and Capital (p. 45), spoke of " crises becoming more frequent and violent." And again in the Communist Manifesto (p. 18), we are told —" Crises by their periodical return put the existence of bourgeois society on its trial and each time more threateningly." But it is to Marx's detailed and mature economic investigation to which we must turn in order to estimate what he thought was the nature and role of Capitalist crises. And here we find no specific reference or concrete indication of a view that some mounting crescendo of crises will ultimately crash to economic ruin.
In point of fact, Marx never formulated a theory of crises, at least not in any systematic or cohesive form. Instead we get a treatment of the different aspects of crises, scattered through the 2nd and 3rd volumes of Capital and Theories of Surplus Value. So far from Marx laying down any hard and fast rules on the subject of crises, we get instead an analysis of a number of tendencies which are bound up with the production of crisis situations.
It seems fairly safe to assume then that Marx in his later and mature investigation of the actual trends in Capitalism, never regarded crises as the agent of the final destruction of extant society. On the contrary there is no little evidence to indicate that he saw crises as a normal but essential phase of the trade cycle which, he said, was peculiar to the Capitalist mode of production.
Indeed it was no other than Marx who pioneered the investigation into the nature of the antithetical yet mutually reciprocal trade cycle. It was Marx who showed one phase of the trade cycle is characterised by an acceleration of capital investment and as a corollary to this an increased tempo of industrial activity, rising employment, rising wages and increasing profits.
Because the different branches of industry are atomistically controlled or to state it alternatively because "anarchy of production," prevails in Capitalism, decisions for capital investment are carried out by Capitalists without knowledge or regard for investment decisions being made at the same time by other Capitalists elsewhere.
As a result of these autonomous and unrelated decisions to invest in a period of expansion, it is hardly surprising that overexpansion of a particular line of industry takes place or what comes to the same thing disproportionality of industrial development between the various branches of production. Thus one industrial sphere may have overexpanded relatively to other spheres and as a result it will be unable to sell its goods at a remunerative price. Consequently there will be in this particular sphere a contraction of investment and hence production. This action will have cumulative effects by leading to a reduction of demand of products and services of those industries which are linked with this particular industrial branch and which in turn will reduce their orders to other concerns likewise linked with them. If the initial overexpansion or disproportionality of industrial development is big enough a general fall in the demand for goods and services will spread from point to point and a general relative over-production will ensue.
Thus the phase of the business cycle associated with accelerating investment, rising wages, rising employment and increasing profits, will come to an end and be replaced by the antithetical phase of reduced investment, falling employment and declining wages and profits.
The orthodox economists also treat of what is termed in modern economic usage the business cycle theory. For them a period of brisk trade activity is linked with a high return on invested capital. While the antithetical phase i.e. a recession, is associated with a decline in the rate of profit below the normal range for investment purposes. Thus for them crises are analysed from the formal level of the supply and demand of investment funds. Marx, however, probed deeper and showed that the behaviour of the Capitalist class springs from the basic features of Capitalist society which constitute a particular set of antagonistic class relations of production and gives rise to an antagonistic form of income distribution. From the general standpoint of the Capitalist class a "recession" is the outcome of an unfavourable distribution of income in that the form of income going to the working class as wages, is too high and that part of income going to them as profits is too low, to make it worth their while to maintain a high level of investment.
If Capitalism could operate on some master plan then the correct proportional expansion between the different branches of industry might be attempted and investment decisions synchronised in respect of the entire economy. But Capitalism does not work like that. Each Capitalist or group of Capitalists produce for a market of whose size they have only an imperfect knowledge, let alone the entire network of markets operating in Capitalism. Hence whether too little or too much is produced cannot be known until after the event and it is only a major upset in the price mechanism which reveals that a number of unrelated and separate investment. decisions have brought about a rupture of equilibrium conditions.
Crises are not as some theorists of under-consumption imagine the outcome of expanded production, outstripping total consumption, demand, and so bringing about some permanent market decline.
It was never Marx's view that crises arise as the result of a chronic bias towards overproduction and an ever-increasing inability of the Capitalists to dispose of their products in a perpetually shrinking market. In Capital, Vol. 3 (p. 299), Marx, commenting on the upward swing of the trade cycle ends thus: " And in this way the cycle would run once more. One portion of capital which had been depreciated by the stagnation of its function would recover its old value. For the rest the same vicious cycle would be described once more in an expanded market and with increased productive forces."
From what has been said it is evident that Marx never viewed crises as an ineluctable agent for the ultimate destruction of existing society but as an antithetical but inseperable phase of the trade cycle.
In the light of the foregoing it would seem that periods of prosperity for the Capitalists i.e., periods of accelerating capital investment bring nemesis in the way of rising wages, rising costs, etc., which sooner or later tend to appreciably diminish profit margins. Crises would then seem the specific remedy for the evils arising from " prosperity." Stated from the more fundamental standpoint of Marx's analysis these evils are, "a production of too many means of production and necessities of life to serve as a means.of exploitation of the labourer at a certain rate of profit."
Nevertheless if crises can be looked upon from one point of view as a retribution for prosperity they can also be regarded as acting as a purgative to the body-economic, allowing it to be. restored to the healthier state of equilibrium. To put the matter specifically, crises contain the germ of a trade recovery. In the first place the existence of a large industrial reserve army will serve to cheapen the price of labour-power and so raise the rate of profit and because of the cheapness of labour-power, tend to retard the introduction of machinery and new methods and so make possible the more primitive technical concerns to become profitable once more. At the same time the sharp depreciation of capital values will lower the organic composition of capital, i.e. lower the ratio of constant capital (means of production) to variable capital (wage payments) and so assist in raising the rate of profit. Again during a crisis there are cheap and abundant resources available, including large reserves of labour-power. Thus the conditions are prepared in a shorter or longer period, for a resumption of increased investment and rising profit margins.
Crises are not then incidental interludes between periods of high trade activity but an essential corrective for the uninhibited self-expansion of capital. As Marx states it: " Periodically the conflict of antagonistic agencies seek vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions, violent eruptions which restore the disturbed equilibrium for a while." (Capital, Vol. 3, p. 292).
To say then that Marx tied up his views on crises with an automatic breakdown theory is either to misunderstand or misrepresent him. While it is true that crises subject Capitalism to stresses and strains, to suggest that they will bring about the social and physical collapse of the system is something quite different. Marx so far as the present writer is aware never used the term " economic collapse of Capitalism."
For Marx, however, crises were a significant part of the dynamics of Capitalism and he regarded his own treatment of them as an important contribution to the understanding of the system. He saw them as not only an outcome of antagonistic agencies but as a means of resolving the conflict in a new equilibrium. The crisis plays then a definite role in influencing the long term trends of the system.
Capitalism may thus be described as a system of unstable equilibrium. Which brings us to Mr. Strachey. who states in Contemporary Capitalism (p. 218) that " Marx regarded the instabilities of Capitalism as a secondary matter and did not expect them to prove fatal to the system." But in that case the economic collapse theory which Mr. Strachey accuses Marx of holding, cannot be explained from Marx's theory of the production cycle of Capitalism. Marx, says Mr. Strachey, formulated something different. Marx's view of economic collapse is deduced from Marx's contention, according to Mr. Strachey, that Capitalism undergoes a continuous process of mass underconsumption and thus an ever-increasing inability of Capitalists to dispose of their products in an ever-decreasing market. Intense mass poverty would result, the workers would revolt and Capitalism would perish.
We are asked to believe, minus any evidence, that Marx gave up his formulation of the trade cycle concept and substituted a view of permanent stagnation, i.e. of falling wages, profits and investment, and ever increasing massive unemployment. Thus the system would run down like a clock. Crises would no longer play an active part; no new equilibrium could be established; capital accumulation would go on contracting and the basic feature of Capitalism, the self-expansion of capital would atrophy. Both employers and workers would become ever poorer, even if at different levels. Mr. Strachey consistent in his confusion, would have us believe nevertheless that Marx thought that in all this process the Capitalists would in some way grow ever richer.
Mr. Strachey, however, flatly contradicts himself in the same paragraph by stating that the instabilities of the system and Marx's alleged underconsumption views of crises are in some way clearly related. He adds lamely " but Marx never fully elucidated the connection between them." Marx did, of course, fully elucidate the connection between the instabilities of Capitalism and the emergence of crises. Mr. Strachey has never fully understood this connection, even though he wrote a book called The Nature of Capitalist Crisis. When Marx in the preface of Capital presupposed a reader willing to think for himself, he was perhaps a little optimistic. But a person who can state on one page that Marx regarded the instabilities of the system as secondary and then on the previous page aver that " Marx and Engels lived in the confident expectation that each crisis would be the system's last" i.e. fatal, is incorrigible.
Marx never constructed a catastrophic theory of crises. Nor did he say, as Mr. Strachey avers, that crises are due to the inability of the workers to buy back what they have produced. Although Mr. Stratchey was posing as a Marxist, he put this view forward in the name of Marx. Nevertheless Marx repudiated Rodbertus' view that crises were caused by a lack of paying consumption and could be remedied by highering wages. Marx also showed that it was " high wages " which constituted a factor for producing a crisis and a plentiful supply of cheap labour-power as a factor for initiating a boom.
Mr. Strachey, however, is not really an economist. He is a politician trying to explain the errors and illusions of the past but in fact only explaining them away. It becomes necessary therefore to set up a lot of false assumptions and with great gusto, knock 'em down. Like most politicians, he has a favourite aunt called Sally.
E.W , Socialist Standard March 1957
It is true that the young Marx in Wage Labour and Capital (p. 45), spoke of " crises becoming more frequent and violent." And again in the Communist Manifesto (p. 18), we are told —" Crises by their periodical return put the existence of bourgeois society on its trial and each time more threateningly." But it is to Marx's detailed and mature economic investigation to which we must turn in order to estimate what he thought was the nature and role of Capitalist crises. And here we find no specific reference or concrete indication of a view that some mounting crescendo of crises will ultimately crash to economic ruin.
In point of fact, Marx never formulated a theory of crises, at least not in any systematic or cohesive form. Instead we get a treatment of the different aspects of crises, scattered through the 2nd and 3rd volumes of Capital and Theories of Surplus Value. So far from Marx laying down any hard and fast rules on the subject of crises, we get instead an analysis of a number of tendencies which are bound up with the production of crisis situations.
It seems fairly safe to assume then that Marx in his later and mature investigation of the actual trends in Capitalism, never regarded crises as the agent of the final destruction of extant society. On the contrary there is no little evidence to indicate that he saw crises as a normal but essential phase of the trade cycle which, he said, was peculiar to the Capitalist mode of production.
Indeed it was no other than Marx who pioneered the investigation into the nature of the antithetical yet mutually reciprocal trade cycle. It was Marx who showed one phase of the trade cycle is characterised by an acceleration of capital investment and as a corollary to this an increased tempo of industrial activity, rising employment, rising wages and increasing profits.
Because the different branches of industry are atomistically controlled or to state it alternatively because "anarchy of production," prevails in Capitalism, decisions for capital investment are carried out by Capitalists without knowledge or regard for investment decisions being made at the same time by other Capitalists elsewhere.
As a result of these autonomous and unrelated decisions to invest in a period of expansion, it is hardly surprising that overexpansion of a particular line of industry takes place or what comes to the same thing disproportionality of industrial development between the various branches of production. Thus one industrial sphere may have overexpanded relatively to other spheres and as a result it will be unable to sell its goods at a remunerative price. Consequently there will be in this particular sphere a contraction of investment and hence production. This action will have cumulative effects by leading to a reduction of demand of products and services of those industries which are linked with this particular industrial branch and which in turn will reduce their orders to other concerns likewise linked with them. If the initial overexpansion or disproportionality of industrial development is big enough a general fall in the demand for goods and services will spread from point to point and a general relative over-production will ensue.
Thus the phase of the business cycle associated with accelerating investment, rising wages, rising employment and increasing profits, will come to an end and be replaced by the antithetical phase of reduced investment, falling employment and declining wages and profits.
The orthodox economists also treat of what is termed in modern economic usage the business cycle theory. For them a period of brisk trade activity is linked with a high return on invested capital. While the antithetical phase i.e. a recession, is associated with a decline in the rate of profit below the normal range for investment purposes. Thus for them crises are analysed from the formal level of the supply and demand of investment funds. Marx, however, probed deeper and showed that the behaviour of the Capitalist class springs from the basic features of Capitalist society which constitute a particular set of antagonistic class relations of production and gives rise to an antagonistic form of income distribution. From the general standpoint of the Capitalist class a "recession" is the outcome of an unfavourable distribution of income in that the form of income going to the working class as wages, is too high and that part of income going to them as profits is too low, to make it worth their while to maintain a high level of investment.
If Capitalism could operate on some master plan then the correct proportional expansion between the different branches of industry might be attempted and investment decisions synchronised in respect of the entire economy. But Capitalism does not work like that. Each Capitalist or group of Capitalists produce for a market of whose size they have only an imperfect knowledge, let alone the entire network of markets operating in Capitalism. Hence whether too little or too much is produced cannot be known until after the event and it is only a major upset in the price mechanism which reveals that a number of unrelated and separate investment. decisions have brought about a rupture of equilibrium conditions.
Crises are not as some theorists of under-consumption imagine the outcome of expanded production, outstripping total consumption, demand, and so bringing about some permanent market decline.
It was never Marx's view that crises arise as the result of a chronic bias towards overproduction and an ever-increasing inability of the Capitalists to dispose of their products in a perpetually shrinking market. In Capital, Vol. 3 (p. 299), Marx, commenting on the upward swing of the trade cycle ends thus: " And in this way the cycle would run once more. One portion of capital which had been depreciated by the stagnation of its function would recover its old value. For the rest the same vicious cycle would be described once more in an expanded market and with increased productive forces."
From what has been said it is evident that Marx never viewed crises as an ineluctable agent for the ultimate destruction of existing society but as an antithetical but inseperable phase of the trade cycle.
In the light of the foregoing it would seem that periods of prosperity for the Capitalists i.e., periods of accelerating capital investment bring nemesis in the way of rising wages, rising costs, etc., which sooner or later tend to appreciably diminish profit margins. Crises would then seem the specific remedy for the evils arising from " prosperity." Stated from the more fundamental standpoint of Marx's analysis these evils are, "a production of too many means of production and necessities of life to serve as a means.of exploitation of the labourer at a certain rate of profit."
Nevertheless if crises can be looked upon from one point of view as a retribution for prosperity they can also be regarded as acting as a purgative to the body-economic, allowing it to be. restored to the healthier state of equilibrium. To put the matter specifically, crises contain the germ of a trade recovery. In the first place the existence of a large industrial reserve army will serve to cheapen the price of labour-power and so raise the rate of profit and because of the cheapness of labour-power, tend to retard the introduction of machinery and new methods and so make possible the more primitive technical concerns to become profitable once more. At the same time the sharp depreciation of capital values will lower the organic composition of capital, i.e. lower the ratio of constant capital (means of production) to variable capital (wage payments) and so assist in raising the rate of profit. Again during a crisis there are cheap and abundant resources available, including large reserves of labour-power. Thus the conditions are prepared in a shorter or longer period, for a resumption of increased investment and rising profit margins.
Crises are not then incidental interludes between periods of high trade activity but an essential corrective for the uninhibited self-expansion of capital. As Marx states it: " Periodically the conflict of antagonistic agencies seek vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions, violent eruptions which restore the disturbed equilibrium for a while." (Capital, Vol. 3, p. 292).
To say then that Marx tied up his views on crises with an automatic breakdown theory is either to misunderstand or misrepresent him. While it is true that crises subject Capitalism to stresses and strains, to suggest that they will bring about the social and physical collapse of the system is something quite different. Marx so far as the present writer is aware never used the term " economic collapse of Capitalism."
For Marx, however, crises were a significant part of the dynamics of Capitalism and he regarded his own treatment of them as an important contribution to the understanding of the system. He saw them as not only an outcome of antagonistic agencies but as a means of resolving the conflict in a new equilibrium. The crisis plays then a definite role in influencing the long term trends of the system.
Capitalism may thus be described as a system of unstable equilibrium. Which brings us to Mr. Strachey. who states in Contemporary Capitalism (p. 218) that " Marx regarded the instabilities of Capitalism as a secondary matter and did not expect them to prove fatal to the system." But in that case the economic collapse theory which Mr. Strachey accuses Marx of holding, cannot be explained from Marx's theory of the production cycle of Capitalism. Marx, says Mr. Strachey, formulated something different. Marx's view of economic collapse is deduced from Marx's contention, according to Mr. Strachey, that Capitalism undergoes a continuous process of mass underconsumption and thus an ever-increasing inability of Capitalists to dispose of their products in an ever-decreasing market. Intense mass poverty would result, the workers would revolt and Capitalism would perish.
We are asked to believe, minus any evidence, that Marx gave up his formulation of the trade cycle concept and substituted a view of permanent stagnation, i.e. of falling wages, profits and investment, and ever increasing massive unemployment. Thus the system would run down like a clock. Crises would no longer play an active part; no new equilibrium could be established; capital accumulation would go on contracting and the basic feature of Capitalism, the self-expansion of capital would atrophy. Both employers and workers would become ever poorer, even if at different levels. Mr. Strachey consistent in his confusion, would have us believe nevertheless that Marx thought that in all this process the Capitalists would in some way grow ever richer.
Mr. Strachey, however, flatly contradicts himself in the same paragraph by stating that the instabilities of the system and Marx's alleged underconsumption views of crises are in some way clearly related. He adds lamely " but Marx never fully elucidated the connection between them." Marx did, of course, fully elucidate the connection between the instabilities of Capitalism and the emergence of crises. Mr. Strachey has never fully understood this connection, even though he wrote a book called The Nature of Capitalist Crisis. When Marx in the preface of Capital presupposed a reader willing to think for himself, he was perhaps a little optimistic. But a person who can state on one page that Marx regarded the instabilities of the system as secondary and then on the previous page aver that " Marx and Engels lived in the confident expectation that each crisis would be the system's last" i.e. fatal, is incorrigible.
Marx never constructed a catastrophic theory of crises. Nor did he say, as Mr. Strachey avers, that crises are due to the inability of the workers to buy back what they have produced. Although Mr. Stratchey was posing as a Marxist, he put this view forward in the name of Marx. Nevertheless Marx repudiated Rodbertus' view that crises were caused by a lack of paying consumption and could be remedied by highering wages. Marx also showed that it was " high wages " which constituted a factor for producing a crisis and a plentiful supply of cheap labour-power as a factor for initiating a boom.
Mr. Strachey, however, is not really an economist. He is a politician trying to explain the errors and illusions of the past but in fact only explaining them away. It becomes necessary therefore to set up a lot of false assumptions and with great gusto, knock 'em down. Like most politicians, he has a favourite aunt called Sally.
E.W , Socialist Standard March 1957
Trotsky: the prophet debunked
Trotsky was born Lev Davidovitch Bronstein, the son of moderately well-off peasant farmers in the southern Ukraine, in 1879. As a student at the University of Odessa he became an anti-Tsarist revolutionary. He soon fell foul of the authorities and was sentenced to prison and exile in Siberia from where he escaped in 1902 using the name of one of his jailers on his false identity card; this name — Trotsky — he was to use for the rest of his life.
Trotsky played a prominent part in the 1905 revolt that followed Russia's defeat in the Russo-Japanese War, being elected the Chairman of the St. Petersburg "soviet" ("soviet" is simply the Russian word for "council"). Oddly in view of his later political evolution, when the split occurred in the Russian Social Democratic movement in 1903 between the Mensheviks (orthodox Social Democrats like Kautsky in Germany) and the Bolsheviks (supporters of Lenin and his concept of a vanguard party of professional revolutionaries). Trotsky tended to favour the Mensheviks. Stalin and his supporters later took great pleasure in publishing one of Trotsky's writings from this period in which he violently criticised Lenin's conception of the party. Trotsky in fact tried to develop a middle position, evolving his own theory of how the anti-Tsarist revolution would develop.
Both the Mensheviks and the Bolsheviks saw the anti-Tsarist revolution as being one that would lead to the establishment of a bourgeois Democratic Republic in Russia (the difference between them was that the Mensheviks tended to see this as being done by the liberal bourgeoisie while the Bolsheviks said it would have to be the work of the vanguard party). Trotsky took up a different position, arguing that if the working class were to come to power in the course of the coming bourgeois revolution in Russia it was unreasonable to expect them to hand over power to the bourgeoisie; they would, and should according to Trotsky, take steps to transform society in a socialist direction.
Anti-Tsarist revolutionary
This theory, which Trotsky called "the theory of the permanent revolution", latching on to a phrase used by Marx in one of his articles on the abortive German bourgeois revolution of 1848-9, was absurd in that it implied that socialism could be on the agenda in economically backward Russia. It was however important historically as it was adopted by Lenin himself in April 1917 when he returned to Russia from exile in Switzerland. As a result Trotsky himself then rallied to the Bolsheviks.
In a very real sense Bolshevik ideology can be seen as a combination of Trotsky's theory of the revolution and Lenin's theory of the party. In 1930 Trotsky wrote a book called The History of the Russian Revolu¬tion, which is essential reading for anyone wanting to understand this event, not only because the author was an active participant in it but also because it unintentionally shows how this wasn't a working class socialist revolution but an anti-feudal revolution led by a vanguard party.
After the Bolshevik seizure of power Trotsky became, first, Commissar for Foreign Affairs and, then, Commander of thep Red Army which successfully won the Civil War against the "White Guards" supported by the Western powers. This gave him an immense prestige both in Russia and among sympathisers with the Russian revolution in the rest of the world. His attitude on other issues during this period was even more anti-working class than that of Lenin who, on one occasion, was forced to intervene to attack as going too far Trotsky's proposal to "militarise" labour and the trade unions.
After Lenin's death Trotsky was gradually eased out of power. He was exiled first to Alma Ata in Russian central Asia and then to Turkey, Norway and finally Mexico. If he had stayed in Russia he would almost certainly have been tortured, tried and shot like Zinoviev, Kamenev, Bukharin and the other original leaders of the Bolshevik Party. All the same he still ended up with a Stalinist ice-pick in his head
Degenerate Workers State
In exile Trotsky played the role of "loyal opposition" to the Stalin regime in Russia. He was very critical of the political aspects of this regime (at least some of them, since he too stood for a one-party dictatorship in Russia), but to his dying day defended the view that the Russian revolution had established a "Workers State" in Russia (whatever that might be) and that this represented a gain for the working class both of Russia and of the whole world.
His view that Russia under Stalin was a Workers State, not a perfect one, certainly, but a Workers State nevertheless, was set out in his book The Revolution Betrayed first published in 1936. This is the origin of the Trotskyist dogma that Russia is a "degenerate Workers State" in which a bureaucracy had usurped political power from the working class but without changing the social basis (nationalisation and planning).
This view is so absurd as to be hardly worth considering seriously: how could the adjective "workers" be applied to a regime where workers could be sent to a labour camp for turning up late for work and shot for going on strike? Trotsky was only able to sustain his point of view by making the completely unmarxist assumption that capitalist distribution relations (the privileges of the Stalinist bureaucracy) could exist on the basis of socialist production relations. Marx, by contrast, had concluded, from a study of past and present societies, that the mode of distribution was entirely determined by the mode of production. Thus the existence of privileged distribution relations in Russia should itself have been sufficient proof that Russia had nothing to do with socialism.
Trotsky rejected the view that Russia was state capitalist on the flimsiest of grounds: the absence of a private capitalist class, of private shareholders and bondholders who could inherit and bequeath their property. He failed to see that what made Russia capitalist was the existence there of wage-labour and capital accumulation not the nature and mode of recruitment of its ruling class.
Trotsky's view that Russia under Stalin was still some sort of "Workers State" was so absurd that it soon aroused criticism within the ranks of the Trotskyist movement itself which, since 1938, had been organised as the Fourth International. Two alternative views emerged. One was that Russia was neither capitalist nor a Workers State but some new kind of exploiting class society. The other was that Russia was state capitalist. The most easily accessible example of the first view is James Burnham's The Managerial Revolution and of the second Tony Cliff's Russia: A Marxist Analysis. Both books are well worth reading, though in fact neither Burnham nor Cliff could claim to be the originators of the theories they put forward. The majority of Trotskyists, however, remain committed to the dogma that Russia is a "degenerate Workers State".
Transitional Demands
Trotskyist theory and practice is rather neatly summed up in the opening sentence of the manifesto the Fourth International adopted at its foundation in 1938. Called The Death Agony of Capitalism and the Tasks of the Fourth International, and drafted by Trotsky himself, it began with the absurd declaration: "The world political situation is chiefly characterised by historical crisis of the leadership of the proletariat". This tendency to reduce everything to a question of the right leadership (Trotsky once wrote a pamphlet on the Paris Commune in which he explained its failure by the absence of a Bolshevik Party there) reminds us that Trotskyists are 100 per cent Leninists and believers in the vanguard party. They believe, in other words, that workers by their own efforts are incapable of emancipating themselves and so must be led by an enlightened minority of professional revolutionaries (generally bourgeois intellectuals like Lenin and Trotsky). Thus they fall under the general criticism of Leninism and indeed of all theories which proclaim that workers need leaders.
The other important point in the manifesto of the Fourth International was the concept of "transitional demands". The manifesto contained a whole list of reform demands which was called "the transitional programme". This reform programme was said to be different from those of openly reformist parties like Labour in Britain and the Social Democratic parties on the Continent in that Trotskyists claimed to be under no illusion that the reforms demanded could be achieved within the framework of capitalism. They were posed as bait by the vanguard party to get workers to struggle for them, on the theory that the workers would learn in the course of the struggle that these demands could not be achieved within capitalism and so would come to struggle (under the leadership of the vanguard party) to abolish capitalism.
Actually, most Trotskyists are not as cynical as they pretend to be here: in discussion with them you gain the clear impression that they share the illusion that the reforms they advocate can be achieved under capitalism (as, indeed, some of them could be). In other words, they are often the victims of their own "tactics".
Splits and sects
After the Second World War, all the Trotskyists in Britain were united for a time in a single organisation, the Revolutionary Communist Party, which was affiliated to the Fourth International. All the leaders of the various Trotskyist sects (Gerry Healy, Ted Grant, Tony Cliff, etc) were together in the RCP.
Most of the splits that subsequently occurred were over the attitude to adopt towards Russia and the Cold War. The group around Cliff, as we have already noted, took the view that Russia had been state capitalist since about 1928 (up till then it had supposedly been a "Workers State"). Logically they adopted the slogan "Neither Washington nor Moscow". Longtime known as the "International Socialists" they are now the Socalist Workers Party. Except on Russia they share all the other Trotskyist illusions (vanguard party, transitional demands, etc).
In 1949 the RCP dissolved itself and most Trotskyists decided to join the Labour Party and "to bore from within". This tactic, known in Trotskyist parlance, as "entryism", is again based on the premise that the mass of the workers need leaders and are there to be manipulated. As would-be leaders of the working class, the argument goes, we must be where the workers are; as in Britain the Labour Party is "the mass party of the working class" this is where we Trotskyists must be if we are to have a chance of influencing (that is, manipulating) the workers.
After the general strike in France in May 1968, which seemed to show that student activists could influence the working class directly without needing to pass through "the mass party of the working class", most of the Trotskyist groups decided to abandon entryism and openly form their own parties. Thus parliamentary elections in Britain came to be enlivened by the presence of parties bearing such titles as "Workers Revolutionary Party", "Socialist Workers Party", "Revolutionary Communist Party", "Socialist Unity", etc. Needless to say, they got no more votes than we in the Socialist Party did.
This abandoning of entryism should not be interpreted as meaning opposition to the Labour Party, because nearly all the Trotskyist groups continue to support the election of a Labour government and to call on workers to vote Labour.
One Trotskyist sect, however, decided not to abandon the Labour Party after 1968 but to continue boring from within: the sect now known as the Militant Tendency (leader: Ted Grant). The absence of the other sects meant that they had a monopoly of this particular hunting ground. So when Labour turned left after 1979 they were there ready to recruit new members and increase their influence. In fact the Militant Tendency has undoubtedly been the most successful of all the Trotskyist groups that have ever infiltrated the Labour Party. They control a number of constituency parties as well as the Labour Party Young Socialists. There are even two or three Trotskyist MP's sitting on the Labour' benches at Westminster.
From an ideological point of view, the Militant Tendency follows orthodox Trotskyism. Thus, for instance, they regard Russia as a "degenerate Workers State" — which means they are more backward than many Labour Party members who willingly recognise that Russia is state capitalist.
Trotsky entirely identified capitalism with private capitalism and so concluded that society would cease to be capitalist once the private capitalist class had been expropriated. This meant that, in contrast to Lenin who mistakenly saw state capitalism as a necessary step towards socialism, Trotsky committed the different mistake of seeing state capitalism as the negation of capitalism. Trotskyism, the movement he gave rise to, is a blend of Leninism and Reformism, committed on paper to replacing private capitalism with state capitalism through a violent insurrection led by a vanguard party, but in practice working to achieve state capitalism through reforms to be enacted by Labour governments.
ALB - Socialist Standard August 1990
further reading
Are the managers really in control? parts one and two (pdf) looks at Burnham.
Trotsky played a prominent part in the 1905 revolt that followed Russia's defeat in the Russo-Japanese War, being elected the Chairman of the St. Petersburg "soviet" ("soviet" is simply the Russian word for "council"). Oddly in view of his later political evolution, when the split occurred in the Russian Social Democratic movement in 1903 between the Mensheviks (orthodox Social Democrats like Kautsky in Germany) and the Bolsheviks (supporters of Lenin and his concept of a vanguard party of professional revolutionaries). Trotsky tended to favour the Mensheviks. Stalin and his supporters later took great pleasure in publishing one of Trotsky's writings from this period in which he violently criticised Lenin's conception of the party. Trotsky in fact tried to develop a middle position, evolving his own theory of how the anti-Tsarist revolution would develop.
Both the Mensheviks and the Bolsheviks saw the anti-Tsarist revolution as being one that would lead to the establishment of a bourgeois Democratic Republic in Russia (the difference between them was that the Mensheviks tended to see this as being done by the liberal bourgeoisie while the Bolsheviks said it would have to be the work of the vanguard party). Trotsky took up a different position, arguing that if the working class were to come to power in the course of the coming bourgeois revolution in Russia it was unreasonable to expect them to hand over power to the bourgeoisie; they would, and should according to Trotsky, take steps to transform society in a socialist direction.
Anti-Tsarist revolutionary
This theory, which Trotsky called "the theory of the permanent revolution", latching on to a phrase used by Marx in one of his articles on the abortive German bourgeois revolution of 1848-9, was absurd in that it implied that socialism could be on the agenda in economically backward Russia. It was however important historically as it was adopted by Lenin himself in April 1917 when he returned to Russia from exile in Switzerland. As a result Trotsky himself then rallied to the Bolsheviks.
In a very real sense Bolshevik ideology can be seen as a combination of Trotsky's theory of the revolution and Lenin's theory of the party. In 1930 Trotsky wrote a book called The History of the Russian Revolu¬tion, which is essential reading for anyone wanting to understand this event, not only because the author was an active participant in it but also because it unintentionally shows how this wasn't a working class socialist revolution but an anti-feudal revolution led by a vanguard party.
After the Bolshevik seizure of power Trotsky became, first, Commissar for Foreign Affairs and, then, Commander of thep Red Army which successfully won the Civil War against the "White Guards" supported by the Western powers. This gave him an immense prestige both in Russia and among sympathisers with the Russian revolution in the rest of the world. His attitude on other issues during this period was even more anti-working class than that of Lenin who, on one occasion, was forced to intervene to attack as going too far Trotsky's proposal to "militarise" labour and the trade unions.
After Lenin's death Trotsky was gradually eased out of power. He was exiled first to Alma Ata in Russian central Asia and then to Turkey, Norway and finally Mexico. If he had stayed in Russia he would almost certainly have been tortured, tried and shot like Zinoviev, Kamenev, Bukharin and the other original leaders of the Bolshevik Party. All the same he still ended up with a Stalinist ice-pick in his head
Degenerate Workers State
In exile Trotsky played the role of "loyal opposition" to the Stalin regime in Russia. He was very critical of the political aspects of this regime (at least some of them, since he too stood for a one-party dictatorship in Russia), but to his dying day defended the view that the Russian revolution had established a "Workers State" in Russia (whatever that might be) and that this represented a gain for the working class both of Russia and of the whole world.
His view that Russia under Stalin was a Workers State, not a perfect one, certainly, but a Workers State nevertheless, was set out in his book The Revolution Betrayed first published in 1936. This is the origin of the Trotskyist dogma that Russia is a "degenerate Workers State" in which a bureaucracy had usurped political power from the working class but without changing the social basis (nationalisation and planning).
This view is so absurd as to be hardly worth considering seriously: how could the adjective "workers" be applied to a regime where workers could be sent to a labour camp for turning up late for work and shot for going on strike? Trotsky was only able to sustain his point of view by making the completely unmarxist assumption that capitalist distribution relations (the privileges of the Stalinist bureaucracy) could exist on the basis of socialist production relations. Marx, by contrast, had concluded, from a study of past and present societies, that the mode of distribution was entirely determined by the mode of production. Thus the existence of privileged distribution relations in Russia should itself have been sufficient proof that Russia had nothing to do with socialism.
Trotsky rejected the view that Russia was state capitalist on the flimsiest of grounds: the absence of a private capitalist class, of private shareholders and bondholders who could inherit and bequeath their property. He failed to see that what made Russia capitalist was the existence there of wage-labour and capital accumulation not the nature and mode of recruitment of its ruling class.
Trotsky's view that Russia under Stalin was still some sort of "Workers State" was so absurd that it soon aroused criticism within the ranks of the Trotskyist movement itself which, since 1938, had been organised as the Fourth International. Two alternative views emerged. One was that Russia was neither capitalist nor a Workers State but some new kind of exploiting class society. The other was that Russia was state capitalist. The most easily accessible example of the first view is James Burnham's The Managerial Revolution and of the second Tony Cliff's Russia: A Marxist Analysis. Both books are well worth reading, though in fact neither Burnham nor Cliff could claim to be the originators of the theories they put forward. The majority of Trotskyists, however, remain committed to the dogma that Russia is a "degenerate Workers State".
Transitional Demands
Trotskyist theory and practice is rather neatly summed up in the opening sentence of the manifesto the Fourth International adopted at its foundation in 1938. Called The Death Agony of Capitalism and the Tasks of the Fourth International, and drafted by Trotsky himself, it began with the absurd declaration: "The world political situation is chiefly characterised by historical crisis of the leadership of the proletariat". This tendency to reduce everything to a question of the right leadership (Trotsky once wrote a pamphlet on the Paris Commune in which he explained its failure by the absence of a Bolshevik Party there) reminds us that Trotskyists are 100 per cent Leninists and believers in the vanguard party. They believe, in other words, that workers by their own efforts are incapable of emancipating themselves and so must be led by an enlightened minority of professional revolutionaries (generally bourgeois intellectuals like Lenin and Trotsky). Thus they fall under the general criticism of Leninism and indeed of all theories which proclaim that workers need leaders.
The other important point in the manifesto of the Fourth International was the concept of "transitional demands". The manifesto contained a whole list of reform demands which was called "the transitional programme". This reform programme was said to be different from those of openly reformist parties like Labour in Britain and the Social Democratic parties on the Continent in that Trotskyists claimed to be under no illusion that the reforms demanded could be achieved within the framework of capitalism. They were posed as bait by the vanguard party to get workers to struggle for them, on the theory that the workers would learn in the course of the struggle that these demands could not be achieved within capitalism and so would come to struggle (under the leadership of the vanguard party) to abolish capitalism.
Actually, most Trotskyists are not as cynical as they pretend to be here: in discussion with them you gain the clear impression that they share the illusion that the reforms they advocate can be achieved under capitalism (as, indeed, some of them could be). In other words, they are often the victims of their own "tactics".
Splits and sects
After the Second World War, all the Trotskyists in Britain were united for a time in a single organisation, the Revolutionary Communist Party, which was affiliated to the Fourth International. All the leaders of the various Trotskyist sects (Gerry Healy, Ted Grant, Tony Cliff, etc) were together in the RCP.
Most of the splits that subsequently occurred were over the attitude to adopt towards Russia and the Cold War. The group around Cliff, as we have already noted, took the view that Russia had been state capitalist since about 1928 (up till then it had supposedly been a "Workers State"). Logically they adopted the slogan "Neither Washington nor Moscow". Longtime known as the "International Socialists" they are now the Socalist Workers Party. Except on Russia they share all the other Trotskyist illusions (vanguard party, transitional demands, etc).
In 1949 the RCP dissolved itself and most Trotskyists decided to join the Labour Party and "to bore from within". This tactic, known in Trotskyist parlance, as "entryism", is again based on the premise that the mass of the workers need leaders and are there to be manipulated. As would-be leaders of the working class, the argument goes, we must be where the workers are; as in Britain the Labour Party is "the mass party of the working class" this is where we Trotskyists must be if we are to have a chance of influencing (that is, manipulating) the workers.
After the general strike in France in May 1968, which seemed to show that student activists could influence the working class directly without needing to pass through "the mass party of the working class", most of the Trotskyist groups decided to abandon entryism and openly form their own parties. Thus parliamentary elections in Britain came to be enlivened by the presence of parties bearing such titles as "Workers Revolutionary Party", "Socialist Workers Party", "Revolutionary Communist Party", "Socialist Unity", etc. Needless to say, they got no more votes than we in the Socialist Party did.
This abandoning of entryism should not be interpreted as meaning opposition to the Labour Party, because nearly all the Trotskyist groups continue to support the election of a Labour government and to call on workers to vote Labour.
One Trotskyist sect, however, decided not to abandon the Labour Party after 1968 but to continue boring from within: the sect now known as the Militant Tendency (leader: Ted Grant). The absence of the other sects meant that they had a monopoly of this particular hunting ground. So when Labour turned left after 1979 they were there ready to recruit new members and increase their influence. In fact the Militant Tendency has undoubtedly been the most successful of all the Trotskyist groups that have ever infiltrated the Labour Party. They control a number of constituency parties as well as the Labour Party Young Socialists. There are even two or three Trotskyist MP's sitting on the Labour' benches at Westminster.
From an ideological point of view, the Militant Tendency follows orthodox Trotskyism. Thus, for instance, they regard Russia as a "degenerate Workers State" — which means they are more backward than many Labour Party members who willingly recognise that Russia is state capitalist.
Trotsky entirely identified capitalism with private capitalism and so concluded that society would cease to be capitalist once the private capitalist class had been expropriated. This meant that, in contrast to Lenin who mistakenly saw state capitalism as a necessary step towards socialism, Trotsky committed the different mistake of seeing state capitalism as the negation of capitalism. Trotskyism, the movement he gave rise to, is a blend of Leninism and Reformism, committed on paper to replacing private capitalism with state capitalism through a violent insurrection led by a vanguard party, but in practice working to achieve state capitalism through reforms to be enacted by Labour governments.
ALB - Socialist Standard August 1990
further reading
Are the managers really in control? parts one and two (pdf) looks at Burnham.
lørdag den 23. august 2008
How Capitalism Works (part 1)
WHAT IS ECONOMICS?
THE REASON THE natural and industrial resources of the world are not used to provide the abundance they are capable of producing is to be sought, not in the realm of technology, but in that of economics.
Economics is basically the study of what happens when wealth is exchanged — that is when it is either bartered for other wealth or bought and sold for money. It is not the study of the production and allocation of wealth as such, but the study of its exchange and how this affects decisions about production and allocation.Exchange is not to be confused with allocation.
Allocation (sometimes called distribution) is about the use which people make of the wealth they have produced: how much they consume immediately. How much they store for future consumption. How much they use to build up or renew their stock of tools and machines. "Allocation" is used here in preference to "distribution" because the latter has acquired other meanings which can cause confusion; it sometimes means transportation (which is really part of production)— but worse shops, which are exchange institu¬tions, have taken to calling themselves the "distributive trade".
In some past societies the amount and kind of wealth that was produced and allocated were decided according to some prearranged plan, even if this "plan" was just a set of tribal customs or some other unwritten code of social behaviour. Wealth was allocated directly for individual and communal use so that the sole aim of production could be said to have been direct allocation, or use.
In societies where the bulk of the wealth is exchanged after it has been produced (and before it is allocated) the production and allocation of wealth is no longer decided according to human plans or customs. The decisions are of course still made by people but within terms of reference outside of their control. Economics is the study of these terms of reference or, perhaps, of the laws or economic forces which come into operation once production for exchange becomes widespread.
THE ENTERPRISE
An exchange institution is a body set up to take economic decisions; that is, decisions about the production and allocation of wealth in an exchange economy. A shop (where products are sold) or a bank (where money is deposited) are obvious examples. Not so obvious perhaps is the "enterprise" or firm, an institution for making decisions about the use of the large-scale, collectively-operated workplaces where the bulk of the world's wealth is produced. The enterprise is the key modern exchange institution since, apart from the sale of human energy for wages and the purchase of consumer goods by wage-earners, exchange today takes place overwhelmingly between enterprises.
An enterprise is an institution which seeks continually to increase the monetary value of its assets (the instruments of production, the raw materials, the stocks and the cash, including the wage fund, it controls.) The monetary value of these assets is sometimes called "capital"; hence "capitalism" as the name for the modern exchange economy. The aim of inter-enterprise exchange is profit, the difference between production costs and sales receipts.
Enterprises aim to increase their capital through making profits, the ratio of the increase in capital to its original value being the rate of profit.
The internal structure of the enterprise— who makes the decisions? Who gets the profits? —varies from State to State according to their differing historical and political conditions. The two most common types of enterprise are the joint-stock company and the nationalised or state industry.
In the joint-stock company the key decisions are made by a board of directors elected by and responsible to the shareholders who supplied the money to buy the assets of the enterprise. The profits are shared between the share¬holders as dividends and the directors (and sometimes the top managers) as fees and high "salaries".
The assets of a state enterprise are usually controlled by a management board appointed by the government. Its profits can be. and are. shared in a great variety of ways. They can. for instance, simply be handed over to the government to use to pay interest to those who have lent it money. Or they could find their way into the pockets of the state-appointed managers, once again through inflated "salaries". Or they could be used to maintain in comfort and privilege those who control the state.
What is significant about the enterprise from an economic point of view is not its internal structure but its role as the mechanism through which the laws of the market are transmitted tc those who make the decisions about the production of wealth— whoever they may be and however they may be chosen. The internal structure of the enterprise could be, and in a few cases is, quite different from either private or state enterprises. The workers could elect their own management committee or workers' council, but not even this would make any difference to the enterprise's economic role. The workers' council would still have to take decisions in accordance with what the market dictated. Real control by the producers over the production and allocation of wealth is not possible within an exchange economy.
WORLD DIVISION OF LABOUR
The production of wealth is now a process involving millions of men and women in even,' part of the world. What used to be the division of labour between individual skilled workers has become, with the development of modern technology, a division of the work of production between hundreds of thousands of collectively-operated workplaces (farms, plantations, mines, ships, docks, railways, factories, offices, warehouses) spread all over the world. Indeed, it is no exaggeration to say that every article produced today is the product of the world labour force co-operating within this world-wide division of labour.
Wealth production is no longer individual or local or national; it is social and worldwide. A single world society already exists but, because the workplaces of the world are controlled by enterprises, it takes the form of a world exchange economy.
The fact that there is only one, worldwide exchange economy is obscured by the political division of the world into states, each with the power to issue its own currency, impose tariffs, raise taxes and pay subsidies. The different economic policies of these states mean that conditions in the world market vary and give rise to the illusion that rather than there being one world economy there are as many "national economies" as there are states. But although states can. and do, try to change world market conditions in their favour, because of the worldwide character of the pro¬ductive process they do not have the power to isolate exchange within their frontiers from exchange outside. Far from it. World market conditions are in the end the most important factor states have to take into account when formulating their policies. They, like enterprises, have to work within the terms of reference of the exchange economy. Of course, states do have the power to make laws about the production and allocation of wealth, as about any other human activity, but enforcing such law is another matter. So is their economic effect.
The natural and industrial resources of the world are now controlled by profit-seeking private and state enter¬prises. In every state only a small minority can draw on these profits as a source of personal income. Whether or not they have title deeds to prove it, they are in practice the owners of the means of production. This applies equally to profit-taking politicians and managers and to shareholders and bondholders. Collectively these owners form a class with exclusive control — a monopoly — over the means of production. This class monopoly is the basis of modern society.
THE LAW OF WAGES
The personal income of those excluded from the means of production is the wage (or salary) they are paid by the enterprise which employs them. These wage-earners form a class of propertyless people since, collectively, they do not own the means of production. As individuals of course most of them do have some personal possessions and savings, but these cannot be used to produce wealth.
It is because they are members of a propertyless class that they are compelled by economic necessity to work for wages. This is the only way they can get money to buy the things they need to live. The wage relation which arises between the owning and the non-owning class is a basic feature of the present exchange economy. The use of wage-labour to produce the wealth of society signifies that human skill and energy has become an article of exchange due to the exclusion of the producers from the means of production. The existence of wage-labour means the existence of production-for-profit and vice versa: they are two aspects of the same social relationship.
The law of wages says that wage-earners tend to receive from their employer a sum of money sufficient to pay for the goods and services they have to buy in order to maintain their working skill and to raise and keep a family at the same standard. It also says that any sum of money regularly paid to wage-earners from a source other than their employer and any goods and services regularly provided free by employers or anyone else means that employers need pay wage-earners a smaller sum than they would otherwise have to.
In terms of goods and services, what this means is that other things being equal, over a given period of time the wage-earners' standard of living is fixed at the amount of goods and services they need to maintain their skills and their families. Except within very narrow limits they can get no more and no less than this. So any attempt, say by the state, to raise their standard of living by providing free services or money payments is bound to fail. The operation of the law of wages will tend to ensure that the overall standard remains the same by causing a reduction in the sum of money paid by the employer. Similarly any reduction in the amount in a pay packet caused by increasing taxes, either on the goods they buy or directly on their wages, will be self-defeating. The law of wages will tend to bring about a corresponding increase in the sum paid by the employer.
Actually this is an oversimplified picture since the law of wages is not an automatic process; it operates only through human activities, through the struggles between the wage-earners and the profit-seeking enterprises that employ them over the size of the wage packet (or salary cheque). Indeed this struggle is the operation of the law of wages and to the extent that the wage-earners cannot, or do not, struggle then their living standards can be reduced. Other factors, like the levels of output and unemployment and the depreciation of the currency, also complicate the picture, sometimes considerably, but the broad outline remains accurate: the wage-earners' standard of living cannot be improved by state subsidies nor can it be reduced by taxation.
This is not to say that the amount of goods and services the average wage-earner gets can never be altered at all. It can be, by two factors. First, by a change in the average skill of the worker. In the 19th century when the skilled handicraftsman was being replaced by a mass of less skilled machine-minding factory hands, often wo¬men and children, the average degree of skill did fall, and with it the wage-earners' standard of living. In the 20th century, on the other hand, with the spread of universal education the average degree of skill, and with it the standard of living, has tended to rise. Second, the amount of goods and services needed to maintain wage-earners and their families is not something that could be calculated ;n precise terms by a team of doctors and scientists. Social factors enter into it too. People's tastes and habits in regard to food, dress, housing, transport and entertain¬ment vary from place to place and change as advancing technology makes new products available. And when, as in a prolonged period of high employment, wage-earners have come to regard as necessities what were once luxuries then what they need to maintain themselves and their families has not only changed but has also increased.
The law of wages does not rule out such changes m living standards but, by their very nature as long term trends, they are increases that cannot be brought about by the actions either of the state or of the wage earners themselves.
FIXING WAGE LEVELS
But why are wages fixed at a certain level? Wages are a price, the price of the skills and energies wage-earners sell to enterprises, and like all prices are not fixed arbitrarily. Prices, in a roundabout way. reflect the amount of human effort that had to go into producing an article from start to finish. So wages, the price of human energy, are an indirect reflection of the amount of work that has to be done to produce all the goods and services needed to keep a human being alive and fit to work.
Wages are the form taken in an exchange economy of the amount of wealth that must be consumed to create and maintain the supply of human energy for the work of production, while profits are the form taken by the surplus wealth produced over and above this. The restriction on the amount of wealth allocated to the class of wage earners is the inevitable outcome of human energy being an article of exchange.
(ALB. Socialist Standard, January 1979)
to be continued...
THE REASON THE natural and industrial resources of the world are not used to provide the abundance they are capable of producing is to be sought, not in the realm of technology, but in that of economics.
Economics is basically the study of what happens when wealth is exchanged — that is when it is either bartered for other wealth or bought and sold for money. It is not the study of the production and allocation of wealth as such, but the study of its exchange and how this affects decisions about production and allocation.Exchange is not to be confused with allocation.
Allocation (sometimes called distribution) is about the use which people make of the wealth they have produced: how much they consume immediately. How much they store for future consumption. How much they use to build up or renew their stock of tools and machines. "Allocation" is used here in preference to "distribution" because the latter has acquired other meanings which can cause confusion; it sometimes means transportation (which is really part of production)— but worse shops, which are exchange institu¬tions, have taken to calling themselves the "distributive trade".
In some past societies the amount and kind of wealth that was produced and allocated were decided according to some prearranged plan, even if this "plan" was just a set of tribal customs or some other unwritten code of social behaviour. Wealth was allocated directly for individual and communal use so that the sole aim of production could be said to have been direct allocation, or use.
In societies where the bulk of the wealth is exchanged after it has been produced (and before it is allocated) the production and allocation of wealth is no longer decided according to human plans or customs. The decisions are of course still made by people but within terms of reference outside of their control. Economics is the study of these terms of reference or, perhaps, of the laws or economic forces which come into operation once production for exchange becomes widespread.
THE ENTERPRISE
An exchange institution is a body set up to take economic decisions; that is, decisions about the production and allocation of wealth in an exchange economy. A shop (where products are sold) or a bank (where money is deposited) are obvious examples. Not so obvious perhaps is the "enterprise" or firm, an institution for making decisions about the use of the large-scale, collectively-operated workplaces where the bulk of the world's wealth is produced. The enterprise is the key modern exchange institution since, apart from the sale of human energy for wages and the purchase of consumer goods by wage-earners, exchange today takes place overwhelmingly between enterprises.
An enterprise is an institution which seeks continually to increase the monetary value of its assets (the instruments of production, the raw materials, the stocks and the cash, including the wage fund, it controls.) The monetary value of these assets is sometimes called "capital"; hence "capitalism" as the name for the modern exchange economy. The aim of inter-enterprise exchange is profit, the difference between production costs and sales receipts.
Enterprises aim to increase their capital through making profits, the ratio of the increase in capital to its original value being the rate of profit.
The internal structure of the enterprise— who makes the decisions? Who gets the profits? —varies from State to State according to their differing historical and political conditions. The two most common types of enterprise are the joint-stock company and the nationalised or state industry.
In the joint-stock company the key decisions are made by a board of directors elected by and responsible to the shareholders who supplied the money to buy the assets of the enterprise. The profits are shared between the share¬holders as dividends and the directors (and sometimes the top managers) as fees and high "salaries".
The assets of a state enterprise are usually controlled by a management board appointed by the government. Its profits can be. and are. shared in a great variety of ways. They can. for instance, simply be handed over to the government to use to pay interest to those who have lent it money. Or they could find their way into the pockets of the state-appointed managers, once again through inflated "salaries". Or they could be used to maintain in comfort and privilege those who control the state.
What is significant about the enterprise from an economic point of view is not its internal structure but its role as the mechanism through which the laws of the market are transmitted tc those who make the decisions about the production of wealth— whoever they may be and however they may be chosen. The internal structure of the enterprise could be, and in a few cases is, quite different from either private or state enterprises. The workers could elect their own management committee or workers' council, but not even this would make any difference to the enterprise's economic role. The workers' council would still have to take decisions in accordance with what the market dictated. Real control by the producers over the production and allocation of wealth is not possible within an exchange economy.
WORLD DIVISION OF LABOUR
The production of wealth is now a process involving millions of men and women in even,' part of the world. What used to be the division of labour between individual skilled workers has become, with the development of modern technology, a division of the work of production between hundreds of thousands of collectively-operated workplaces (farms, plantations, mines, ships, docks, railways, factories, offices, warehouses) spread all over the world. Indeed, it is no exaggeration to say that every article produced today is the product of the world labour force co-operating within this world-wide division of labour.
Wealth production is no longer individual or local or national; it is social and worldwide. A single world society already exists but, because the workplaces of the world are controlled by enterprises, it takes the form of a world exchange economy.
The fact that there is only one, worldwide exchange economy is obscured by the political division of the world into states, each with the power to issue its own currency, impose tariffs, raise taxes and pay subsidies. The different economic policies of these states mean that conditions in the world market vary and give rise to the illusion that rather than there being one world economy there are as many "national economies" as there are states. But although states can. and do, try to change world market conditions in their favour, because of the worldwide character of the pro¬ductive process they do not have the power to isolate exchange within their frontiers from exchange outside. Far from it. World market conditions are in the end the most important factor states have to take into account when formulating their policies. They, like enterprises, have to work within the terms of reference of the exchange economy. Of course, states do have the power to make laws about the production and allocation of wealth, as about any other human activity, but enforcing such law is another matter. So is their economic effect.
The natural and industrial resources of the world are now controlled by profit-seeking private and state enter¬prises. In every state only a small minority can draw on these profits as a source of personal income. Whether or not they have title deeds to prove it, they are in practice the owners of the means of production. This applies equally to profit-taking politicians and managers and to shareholders and bondholders. Collectively these owners form a class with exclusive control — a monopoly — over the means of production. This class monopoly is the basis of modern society.
THE LAW OF WAGES
The personal income of those excluded from the means of production is the wage (or salary) they are paid by the enterprise which employs them. These wage-earners form a class of propertyless people since, collectively, they do not own the means of production. As individuals of course most of them do have some personal possessions and savings, but these cannot be used to produce wealth.
It is because they are members of a propertyless class that they are compelled by economic necessity to work for wages. This is the only way they can get money to buy the things they need to live. The wage relation which arises between the owning and the non-owning class is a basic feature of the present exchange economy. The use of wage-labour to produce the wealth of society signifies that human skill and energy has become an article of exchange due to the exclusion of the producers from the means of production. The existence of wage-labour means the existence of production-for-profit and vice versa: they are two aspects of the same social relationship.
The law of wages says that wage-earners tend to receive from their employer a sum of money sufficient to pay for the goods and services they have to buy in order to maintain their working skill and to raise and keep a family at the same standard. It also says that any sum of money regularly paid to wage-earners from a source other than their employer and any goods and services regularly provided free by employers or anyone else means that employers need pay wage-earners a smaller sum than they would otherwise have to.
In terms of goods and services, what this means is that other things being equal, over a given period of time the wage-earners' standard of living is fixed at the amount of goods and services they need to maintain their skills and their families. Except within very narrow limits they can get no more and no less than this. So any attempt, say by the state, to raise their standard of living by providing free services or money payments is bound to fail. The operation of the law of wages will tend to ensure that the overall standard remains the same by causing a reduction in the sum of money paid by the employer. Similarly any reduction in the amount in a pay packet caused by increasing taxes, either on the goods they buy or directly on their wages, will be self-defeating. The law of wages will tend to bring about a corresponding increase in the sum paid by the employer.
Actually this is an oversimplified picture since the law of wages is not an automatic process; it operates only through human activities, through the struggles between the wage-earners and the profit-seeking enterprises that employ them over the size of the wage packet (or salary cheque). Indeed this struggle is the operation of the law of wages and to the extent that the wage-earners cannot, or do not, struggle then their living standards can be reduced. Other factors, like the levels of output and unemployment and the depreciation of the currency, also complicate the picture, sometimes considerably, but the broad outline remains accurate: the wage-earners' standard of living cannot be improved by state subsidies nor can it be reduced by taxation.
This is not to say that the amount of goods and services the average wage-earner gets can never be altered at all. It can be, by two factors. First, by a change in the average skill of the worker. In the 19th century when the skilled handicraftsman was being replaced by a mass of less skilled machine-minding factory hands, often wo¬men and children, the average degree of skill did fall, and with it the wage-earners' standard of living. In the 20th century, on the other hand, with the spread of universal education the average degree of skill, and with it the standard of living, has tended to rise. Second, the amount of goods and services needed to maintain wage-earners and their families is not something that could be calculated ;n precise terms by a team of doctors and scientists. Social factors enter into it too. People's tastes and habits in regard to food, dress, housing, transport and entertain¬ment vary from place to place and change as advancing technology makes new products available. And when, as in a prolonged period of high employment, wage-earners have come to regard as necessities what were once luxuries then what they need to maintain themselves and their families has not only changed but has also increased.
The law of wages does not rule out such changes m living standards but, by their very nature as long term trends, they are increases that cannot be brought about by the actions either of the state or of the wage earners themselves.
FIXING WAGE LEVELS
But why are wages fixed at a certain level? Wages are a price, the price of the skills and energies wage-earners sell to enterprises, and like all prices are not fixed arbitrarily. Prices, in a roundabout way. reflect the amount of human effort that had to go into producing an article from start to finish. So wages, the price of human energy, are an indirect reflection of the amount of work that has to be done to produce all the goods and services needed to keep a human being alive and fit to work.
Wages are the form taken in an exchange economy of the amount of wealth that must be consumed to create and maintain the supply of human energy for the work of production, while profits are the form taken by the surplus wealth produced over and above this. The restriction on the amount of wealth allocated to the class of wage earners is the inevitable outcome of human energy being an article of exchange.
(ALB. Socialist Standard, January 1979)
to be continued...
'Socialist' China questioned
The Questions of the Day pamphlet got a rather ire response from some maoists. The following article was the response. - Gray
OUR NEW PAMPHLET Questions of the Day is, we think, a good 50p worth.
But it does contain an error. On page 86 in the chapter on the Chinese Revolution, we quote from Mao's July 1949 statement On People's Democratic Dictatorship.
"...and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism not to destroy it."
Unfortunately, we omitted the word "present." You may be excused for asking 'So what?' However a blunder is a blunder. Besides, some members of a maoist sect were particularly annoyed and accused us of being liars and distorters.
The omission of the word "present" is important to the maoists. They believe that the policy of regulating capitalism no longer applies because China is now Socialist.
Let's examine that claim. The People's Republic inherited from the Nationalists a sizeable state-owned sector in industry, banking and transport. About one third of industrial output was produced by enterprises confiscated by the Nationalists as Japanese assets at the end of World War II. It gave Mao and the Chinese Communist Party a base for increasing state ownership.
At first, private enterprise was allowed to continue. After all hadn't Mao urged the workers to "unite with the national bourgeoisie in common struggle"? (Whatever happened to the class struggle? You may well ask) This meant that those hundreds of thousands of capitalists got their reward for backing the winning side in the civil war.
Between 1952 and 1955, economic and ideological pressures coupled with financial inducements helped enlarge the state control at the expense of private ownership. Government policy was still to regulate capitalism, and the system was officially referred to as "state capitalism".
Then in 1955 a large scale nationalisation drive was launched to convert the rest of the private enterprises in modern industry to joint public and private ownership.
By the following year 67.5 per cent of industrial enterprises excluding handicrafts was government owned. The remainder were joint public and private enterprises. (State Statistical Bureau, Ten Great Years, Peking 1960.) The Goverment apparatus was still busy regulating capitalism.
But wait! Here's Mao claiming to have established socialism. In his speech 'On the Correct Handling of Contradictions Among the People.' Feb. 1957, (Selected Works Peking 1977 vol. 5, p. 394) he says:
"But our socialist system has only just been set up; it is not yet fully established or fully consolidated. In joint state-private industrial and commercial enterprises, captalists still get a fixed rate of interest on their capital, that is to say exploitation still exists."
And How. In these public-private enterprises, the capitalists, in return for relinquishing full ownership received 5 per cent annual interest on the value of their investment regardless of profit or loss. This remuneration was promised to private stockholders for a period of six years. It should therefore have come to a halt in 1962.
However in 1966, Dr. Barry Richman, a Canadian consultant in management and economic development, went to China on a two month tour. He visited eleven cities and in the course of his research project conducted interviews in some 38 industries with over 200 Chinese people including managers, Communist Party and Trade Union Officials, specialists, engineers and other workers.
The results are in a bulky 968 page tome entitled Industrial Society in Communist China (1969). The chapter entitled Communist China's Red Capitalists is most illuminating. It opens as follows:
"On my visit to Shanghai in May 1866 it was indeed disconcerting for me to be picked up by a native Chinese capitalist in a new Jaguar, taken to his large factory for a day of discussions, and later to his sumptious home where he still lives as a wealthy industrialist does in a capitalist nation. Mr. Wu Tsung-i, my Chinese Communist capitalist acquaintance, not only lives like a captalist but also looks like a capitalist and at times, still thinks and acts like a capitalist . . ."
No wonder. His investment was assessed at $640,000 from which he was paid the equivalent in yuan of $32,000 per year. He also picked up a salary of 380 yuan per month. But Mr. Wu was small time.
Comrade Liu Tsing Kee was a real Chinese fat cat. A member of both the Shanghai Congress, and the National People Congress, he received a whackmg $400,000 annually from his five major cotton mills. His family assets were estimated at $16m and according to Richman he employed four servants in a palatial home which was stuffed with antiques.
Richman reckoned that there were about 300,000 capitalists in the People's Republic. Ninety thousand of them, he said, were in Shanghai alone. And this was supposed to be Socialism.
As recently as 1972 Professor Ishwa C. Ojha of Boston University attended the funeral of the late minister of Foreign Affairs, Chen Yi. The professor told our companion journal The Western Socialist (No. 3 1972) that the national capitalists were represented by one of their number. In his opinion however, they were at that time somewhat subdued and not advertised as extensively as they had been in the past.
At the present time the Chinese 'socialists' are not very forthcoming about the status of the national capitalists. Perhaps they're just too much of an embarrassment.
But regardless of their current standing one thing is obvious. The Chinese Communist Party equates socialism with nationalization. Mao himself said so in 1949.
"When the time comes to realize socialism, that is to nationalize private enterprise, we shall carry the work of educating and remoulding them (the national capitalists) a step further."
(On the People's Democratic Dictatorship)
In the opinion of Professor Alexander Eckstein (China's Economic Revolution, Cambridge Press 1977)
"... a country embarking on the process of deliberate industrialization in the mid-twentieth century will necessarily develop a different industrial structure than a country that may have experienced its industrial revolution amidst laissez-faire conditions in the nineteenth century."
State ownership in China is nothing more than a move towards modernisation in an attempt to enable China to compete effectively with other nations in 20th century capitalism.
Apologists for the Chinese regime sometimes maintain that criticism is irrelevant because they are building an egalitarian society.
Professor Eckstein found little evidence of this when he visited China in 1972.
"On the contrary, he writes on p. 281, "as one travels around China and meets peasants, workers, cadres, and high ranking government officials, status differences are clearly apparent in many subtle ways such as dress, bearing, deference by others, and many other privileges that surround power positions in all societies."
He also points out that wages of top people can be as much as twenty times that of the lowest paid.
The Chinese Communist Party, being supposedly Marxist, would presumably be aware of Marx's pronouncement on the possibility of egalitarianism within the wages system.
"Upon the basis of the wages system the value of labouring power is settled like that of every other commodity: and as different kinds of labouring power have different values, or require a different quantity of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system." (Wages Price and Profit)
Modern China has commodity production, buying and selling, wages and prices, money and markets — all the paraphernalia of capitalism.
Speaking about the modern state Engels pointed out:
"The more it proceeds to the taking over of the productive forces the more does it actually become the national capitalist, the more citizens does it exploit. The wages workers remain wages workers—proletarians." (Anti-Duhring)
Anyone who still doubts that China is capitalist has only to consider Chairman Hua's newest master plan — the introduction of bonuses, work quotas and piece work (Guardian 28th April 1978)
As any British factory worker knows, piece work is an attempt to increase productivity and therefore profits. It causes a speed-up in work rate which can lead to tiredness and a relaxation in safety standards.
Marx's view of piecework was straightforward. It was, he said "the form of wages most in harmony with the capitalist mode of production." (Capital Vol. 1)
After the great leaps and the five year plans the Chinese Communist Party's policy is still to regulate capitalism — only conscious political action by a majority of the world's working class can destroy it.
Eddie Toal. Socialist Standard, August 1978
OUR NEW PAMPHLET Questions of the Day is, we think, a good 50p worth.
But it does contain an error. On page 86 in the chapter on the Chinese Revolution, we quote from Mao's July 1949 statement On People's Democratic Dictatorship.
"...and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism not to destroy it."
Unfortunately, we omitted the word "present." You may be excused for asking 'So what?' However a blunder is a blunder. Besides, some members of a maoist sect were particularly annoyed and accused us of being liars and distorters.
The omission of the word "present" is important to the maoists. They believe that the policy of regulating capitalism no longer applies because China is now Socialist.
Let's examine that claim. The People's Republic inherited from the Nationalists a sizeable state-owned sector in industry, banking and transport. About one third of industrial output was produced by enterprises confiscated by the Nationalists as Japanese assets at the end of World War II. It gave Mao and the Chinese Communist Party a base for increasing state ownership.
At first, private enterprise was allowed to continue. After all hadn't Mao urged the workers to "unite with the national bourgeoisie in common struggle"? (Whatever happened to the class struggle? You may well ask) This meant that those hundreds of thousands of capitalists got their reward for backing the winning side in the civil war.
Between 1952 and 1955, economic and ideological pressures coupled with financial inducements helped enlarge the state control at the expense of private ownership. Government policy was still to regulate capitalism, and the system was officially referred to as "state capitalism".
Then in 1955 a large scale nationalisation drive was launched to convert the rest of the private enterprises in modern industry to joint public and private ownership.
By the following year 67.5 per cent of industrial enterprises excluding handicrafts was government owned. The remainder were joint public and private enterprises. (State Statistical Bureau, Ten Great Years, Peking 1960.) The Goverment apparatus was still busy regulating capitalism.
But wait! Here's Mao claiming to have established socialism. In his speech 'On the Correct Handling of Contradictions Among the People.' Feb. 1957, (Selected Works Peking 1977 vol. 5, p. 394) he says:
"But our socialist system has only just been set up; it is not yet fully established or fully consolidated. In joint state-private industrial and commercial enterprises, captalists still get a fixed rate of interest on their capital, that is to say exploitation still exists."
And How. In these public-private enterprises, the capitalists, in return for relinquishing full ownership received 5 per cent annual interest on the value of their investment regardless of profit or loss. This remuneration was promised to private stockholders for a period of six years. It should therefore have come to a halt in 1962.
However in 1966, Dr. Barry Richman, a Canadian consultant in management and economic development, went to China on a two month tour. He visited eleven cities and in the course of his research project conducted interviews in some 38 industries with over 200 Chinese people including managers, Communist Party and Trade Union Officials, specialists, engineers and other workers.
The results are in a bulky 968 page tome entitled Industrial Society in Communist China (1969). The chapter entitled Communist China's Red Capitalists is most illuminating. It opens as follows:
"On my visit to Shanghai in May 1866 it was indeed disconcerting for me to be picked up by a native Chinese capitalist in a new Jaguar, taken to his large factory for a day of discussions, and later to his sumptious home where he still lives as a wealthy industrialist does in a capitalist nation. Mr. Wu Tsung-i, my Chinese Communist capitalist acquaintance, not only lives like a captalist but also looks like a capitalist and at times, still thinks and acts like a capitalist . . ."
No wonder. His investment was assessed at $640,000 from which he was paid the equivalent in yuan of $32,000 per year. He also picked up a salary of 380 yuan per month. But Mr. Wu was small time.
Comrade Liu Tsing Kee was a real Chinese fat cat. A member of both the Shanghai Congress, and the National People Congress, he received a whackmg $400,000 annually from his five major cotton mills. His family assets were estimated at $16m and according to Richman he employed four servants in a palatial home which was stuffed with antiques.
Richman reckoned that there were about 300,000 capitalists in the People's Republic. Ninety thousand of them, he said, were in Shanghai alone. And this was supposed to be Socialism.
As recently as 1972 Professor Ishwa C. Ojha of Boston University attended the funeral of the late minister of Foreign Affairs, Chen Yi. The professor told our companion journal The Western Socialist (No. 3 1972) that the national capitalists were represented by one of their number. In his opinion however, they were at that time somewhat subdued and not advertised as extensively as they had been in the past.
At the present time the Chinese 'socialists' are not very forthcoming about the status of the national capitalists. Perhaps they're just too much of an embarrassment.
But regardless of their current standing one thing is obvious. The Chinese Communist Party equates socialism with nationalization. Mao himself said so in 1949.
"When the time comes to realize socialism, that is to nationalize private enterprise, we shall carry the work of educating and remoulding them (the national capitalists) a step further."
(On the People's Democratic Dictatorship)
In the opinion of Professor Alexander Eckstein (China's Economic Revolution, Cambridge Press 1977)
"... a country embarking on the process of deliberate industrialization in the mid-twentieth century will necessarily develop a different industrial structure than a country that may have experienced its industrial revolution amidst laissez-faire conditions in the nineteenth century."
State ownership in China is nothing more than a move towards modernisation in an attempt to enable China to compete effectively with other nations in 20th century capitalism.
Apologists for the Chinese regime sometimes maintain that criticism is irrelevant because they are building an egalitarian society.
Professor Eckstein found little evidence of this when he visited China in 1972.
"On the contrary, he writes on p. 281, "as one travels around China and meets peasants, workers, cadres, and high ranking government officials, status differences are clearly apparent in many subtle ways such as dress, bearing, deference by others, and many other privileges that surround power positions in all societies."
He also points out that wages of top people can be as much as twenty times that of the lowest paid.
The Chinese Communist Party, being supposedly Marxist, would presumably be aware of Marx's pronouncement on the possibility of egalitarianism within the wages system.
"Upon the basis of the wages system the value of labouring power is settled like that of every other commodity: and as different kinds of labouring power have different values, or require a different quantity of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system." (Wages Price and Profit)
Modern China has commodity production, buying and selling, wages and prices, money and markets — all the paraphernalia of capitalism.
Speaking about the modern state Engels pointed out:
"The more it proceeds to the taking over of the productive forces the more does it actually become the national capitalist, the more citizens does it exploit. The wages workers remain wages workers—proletarians." (Anti-Duhring)
Anyone who still doubts that China is capitalist has only to consider Chairman Hua's newest master plan — the introduction of bonuses, work quotas and piece work (Guardian 28th April 1978)
As any British factory worker knows, piece work is an attempt to increase productivity and therefore profits. It causes a speed-up in work rate which can lead to tiredness and a relaxation in safety standards.
Marx's view of piecework was straightforward. It was, he said "the form of wages most in harmony with the capitalist mode of production." (Capital Vol. 1)
After the great leaps and the five year plans the Chinese Communist Party's policy is still to regulate capitalism — only conscious political action by a majority of the world's working class can destroy it.
Eddie Toal. Socialist Standard, August 1978
fredag den 22. august 2008
A Vintage Debate between the SPGB and Independent Labour Party
THE SOCIALIST PARTY versus THE I.L.P.
OUR DEBATE WITH JAMES MAXTON, M.P.
On Wednesday, May 23rd, a well-attended debate was held at the Memorial Hall between J. Maxton, M.P., representing the I.L.P., and J. Fitzgerald, representing the S.P.G.B. Mr. Chapman Cohen, Editor of " Freethinker," took the chair. The subject was "Which Party Should the Working Class Support, the I.L.P. or the S.P.G.B.? "
J. Fitzgerald spoke for the first half-hour. He began by defining terms. By working class is meant those who depend upon the sale of their services for their living. By the capitalist class is meant those persons who buy the services of the workers. Capital does not mean merely wealth used for the production of further wealth, but wealth invested for the purpose of obtaining a nett surplus, called interest. This is the view not only of a Socialist, Marx, but also of capitalist economists like Bohm-Bawerk. Wealth is the product of the application of human energies to Nature-given material. The capitalist purchases the mental and physical energies of the workers, and after the payment of all expenses, he retains the nett surplus. The workers may not use the machinery of production — land, railways, factories, etc — without the permission of the capitalists who own these things. The lives of the workers are under the control of the capitalists who own their means of living. The workers are a slave class — wage-slaves.
HOW THE WORKERS ARE ENSLAVED.
The armed forces of society — the police, the army, the air force, the navy, etc — are under the control of the capitalist class. These armed forces are provided for annually by Parliament. Those who control Parliament control the armed forces by which they retain control of the means of wealth production. The capitalists and their agents are voted into Parliament at each election by the workers, who form the bulk of the electors. The only way to secure the "emancipation of the workers" is, first, to obtain control of the political machinery. When the workers want Socialism they can, through the vote, secure this control.
IS THERE WEALTH ENOUGH?
It is not true that the means of wealth production are inadequate. In spite of a million or more unemployed and of the waste of capitalist production, markets are overstocked, and combines are compelled to limit production in almost every industry. Five firms are reported by an American Government report to control half of the food supply of the world. In face of this, little reforms of capitalism are futile. The social ownership of the means of wealth production is the only remedy and can be secured only by the workers taking control of the political machinery.
WHERE DOES THE I.L.P. STAND?
I.L.P. leaders, at times, deny the existence of the class struggle. Keir Hardie and Ramsay MacDonald both did this.
MR. MAXTON'S CASE.
J. Maxton said that he was disappointed because he felt that he entirely agreed with the case put forward by his opponent. This statement of Socialist first principles was unassailable. The definitions were clear and correct. He accepted absolutely the diagnosis given. The workers accept capitalism and believe that the capitalists are a superior and necessary class. The only remedy is for the workers to awaken to the loss they suffer in being deprived of the necessities and luxuries of life. The problem before the Socialist is to awaken the worker to his subject position in society. The justification for this debate is that it may help towards this awakening and also that it may help towards achieving unity of working-class forces.
POINTS OF DIFFERENCE.
He had great difficulty in finding points of difference. Mr. J. Fitzgerald had quoted certain leaders of the I.L.P., but he, Mr. Maxton, held that he is the present leader of the I.L.P. and could speak on their behalf. It was not fair to quote against him statements made by someone else in 1902. He did not believe in those statements quoted. He fully accepted the theory of the class struggle and the necessity of basing Socialist tactics on that theory. He definitely repudiated tne application of biological theories to politics and social questions.
The first necessity of an effective working-class organisation is the possession of a clear aim and policy. He and his opponent are equally doing the necessary propaganda. He denied that any Socialist organ¬isation had done propaganda work equal in quality and quantity to the I.L.P.
I.L.P. PROPAGANDA.
Socialist propaganda must be delivered in a way understandable by the average worker. This the I.L.P. had done. It must be related to the circumstances of the ordinary worker's life. The I.L.P. had pointed out to the workers the outstanding evils which are the effects of capitalism, but they did not believe that by these means they were abolishing capitalism. Psychologically that is the sounder method of approach to the workers, to awaken them to the realities of capitalism. But propaganda is not enough. The way to freedom is by the capture of political power. He and his opponent agreed on this also. He, however, thought there might be a point of difference. The I.L.P. said that it was necessary to start now capturing political power. It was needful to gather together into one great organisation — the Labour Party — all working-class organisations. To this end the I.L.P. fought elections, challenging all capitalist candidates. Year by year they had increased in representation in the House of Commons. To-day there are far more representatives of the working class than ever before. He challenged contradiction on that. He agreed that a working-class party must have no other object than the establishment of Socialism. The I.L.P. seeks to induce the Labour Party to accept Socialism as its object. They wanted to give the Labour Party a clear majority in the House. All of this kind of work went on side by side in the I.L.P.
THE LABOUR PARTY AND SOCIALISM
The I.L.P. has formed the Labour Party and got it to accept Socialism. It was now the task of the I.L.P. to lay down these steps to be taken to secure Socialism. This was the purpose of its "Socialism in Our Time" policy."
He cast no reflection on any working-class organisation. He appreciated the Fabians, the S.P.G.B., and also the Communist Party.
FITZGERALD REPLIES
He pointed out that while Mr. MacDonald applied the theory of uninterrupted evolution to society, the son of Charles Darwin had shown that the Marxian view of social development by revolution is correct.
The debate was not between two individuals but between two parties. Mr. MacDonald only this year had written that poverty is largely the result of the pressure of population on the means of subsistence. This was untrue when Malthus said it in the eighteenth century, and is untrue to-day.
Right from its inception the I.L.P. had urged the workers to put political power into the hands of the capitalist class.
In the "New Leader" for April 13th Mr. Maxton said that he wanted to narrow the gulf between rich and poor. The Socialist wanted to abolish the gulf, not to narrow it. The I.L.P. wanted to abolish the conception of master and servant, but so do the Liberals. Capital — admitted by Mr. Maxton to be the means of robbing the workers — cannot be "communally owned," as is the object of the I.L.P. For 35 years, in Mr. Maxton's words, the I.L.P. had fought for the living-wage — and had not secured it.
THE I.L.P. PROGRAMME.
The I.L.P. had recently run a competition for a Labour programme in the columns of the "New Leader." One part was a minimum wage low enough not to bring Press opposition. This programme did not even refer to Socialism. It proposed nationalisation with compensation.
THE WAR.
The War in 1914 brought to a focus the difference between the I.L.P. and the Socialist Party. In August, 1914, the S.P.G.B. declared plainly that the War was a capitalist war, in no way involving interests of the working class.
In August, 1914, in the "Labour Leader" Keir Hardie spoke of "our interests as a nation" being at stake. We, the workers, had no interest. Mr. Ramsay MacDonald in Parliament offered to support the War if the nation were in danger.
MR.MAXTON REPLIES
He could this time say that he faced points of difference, but he would repeat that he looked to the future, not the past. The statements quoted did not controvert the statement that the I.L.P. stood definitely against the War. He would challenge anyone to question his attitude or statements during the War. He was prepared to defend his own position. It must be common knowledge that Ramsay MacDonald is just as critical of the I.L.P. as Fitzgerald is, and the points he criticises are just the same. The I.L.P. wants Socialism, but what the workers want is a living wage. The fact that capitalism cannot provide this is the biggest propaganda point against capitalism.
THE GOLF BETWEEN RICH AND POOR.
In speaking of the narrowing of the gulf between rich and poor, he said, "narrowing to vanishing point" — this was not reported in the "New Leader." He denied that the Liberal Report asked for the abolition of the status implied by the terms master and servant. In Socialism, as the I.L.P. understood it, there would be no exploitation. He admited that the word capital was carelessly used in the declaration of the objects of the I.L.P., but the workers are not interested in the splitting of hairs. He, Mr. Maxton, had himself carelessly talked of the public ownership of capital when he should have said the public ownership of the means of wealth production. But it is of no importance in the real work of Socialist education.
PRACTICAL WORK
The I.L.P. devotes its time to the practical work of building up an effective machine for the establishment of Socialism. The S.P.G.B., in laying down its general principles, was only saying something which would be agreed with by every member of the Parliamentary Labour Party from MacDonald downwards. The difference only begins when it is a question of practical work. The S.P.G.B. refuses to face up to its responsibilities. Socialism is a question of human will and human organisation. Socialism can be attained by violence or by the "inevitability of gradualness." All depends on human will and human intelligence. It depends not on any god or other power outside ourselves.
FITZGERALD CONCLUDES.
He was not responsible for incorrect passages of Mr. Maxton's speech quoted in the "New Leader." The S.P.G.B. expelled those of its members who supported the War. The I.L.P. did not deal with its leading members who supported the War. When the I.L.P. misuses the word "capital" it misleads the working class. Of the 154 Labour M.P.s, 106 are members of the I.L.P., and the I.L.P. cannot therefore condemn the Labour Party without at the same time condemning itself. Under Socialism there is no question of remu¬neration. Money is a feature of private property systems. With Socialism it will not be needed. Where there is plenty for all there is no question of remuneration, equal or otherwise.
The final point was that any Party which urges the workers to place power in the hands of the master class is betraying the interests of the workers.
MR. MAXTON WINDS UP.
Mr. Maxton gave a blank denial to the charge that the I.L.P. has supported, or is supporting, the enemies of the working class. Never has the Party supported other than Labour and Socialist candidates. He gave that on his personal word of honour. He had heard that there had been friendly understandings between Labour and Liberal candidates, but he had also heard the denial of these statements.
But again he would urge that stirring up garbage was no work for Socialists. Since 1911, when he commenced his active work, there had never been any bargaining.
He agreed that the I.L.P. had not expelled dissentient minorities except in one or two very extreme cases. But there must be immense toleration if we are to succeed in organising the working class. There must be give and take. In view of the time it takes to make a Socialist, we must not fling a man out for his first mistake. It was the choice between being a narrow sect and being an effective organisation. When Mr. Maxton made mistakes he wanted to be treated tolerantly and he would give others the same toleration. Expulsion must be used only in the most extreme cases. The greatest problem is not to get a few men with a narrow view of Socialism, but to get millions with a great determination and as much knowledge as can be given in the time available. He believed that the time is short before the majority make up their minds to have Socialism. The work rendered by the I.L.P. in the past has been a good and valuable contribution to the building up of the Socialist movement. The I.L.P. will play an important part in achieving Socialism, a work not for the I.L.P. or the S.P.G.B., but for the workers of the world.
(Socialist Standard June 1928)
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