Is the World Slump Over Yet?

In 1994, David Perrin reviewed a book which argued that the worst had yet to come in the then present world economic crisis. 14 years later, "ring of truth" comes to mind. - Gray

The Great Reckoning by James Dale Davidson and William Rees-Mogg (Pan, London, 1994 £7.99), subtitled "How the World Will Change Before 2000", aims to be prophetic. It forsees rocketing taxes, worldwide stock market crashes, a further fall in the property market, a collapse of the welfare state, social disintegration writ large, petty nationalist squabbles and terrorism.

The odd thing is that its authors are both gung-ho supporters of the very system - capitalism - that is capable of unleashing such horror, and find no contradiction in their position. They view the economic basis of capitalism as being fundamentally unstable, yet their advice is only to those already wealthy enough to be able to use their capital to their own advantage in the coming economic crunch. No talk of revolution here.

Nevertheless, The Great Reckoning is a fairly sophisticated book, which is unusual for one that prophecies a Doomsday scenario. Central to its analysis is its prediction of a 1930s-style economic crisis from which other dangers will follow. Davidson and Rees-Mogg claim that there are two main reasons why the world capitalist economy is in for a major period of slump. One is taken from the Austrian Physicist Cesare Marchetti who has spent time analysing the penetration of innovations and products in the capitalist economy. Marchetti dispenses with price-analysis and deals only in physical quantities, claiming that the penetration of commodities into markets can be equated with the spread of living species. He has, for instance, argued that the growth and spread of motor-cars into Western Europe can be explained by the same logistic equation that describes the penetration of, say, rabbits into Australia. Ten years ago Marchetti claimed that most of the markets that provided the spur for the post-war economic boom, like motor-cars, had become saturated. This, he reasoned, would mean economic slowdown.

Economic Slowdown

Marchetti'a argument doesn't fully take into account that technological innovation is itself a spur to capitalist growth and that the "old" industries are forever being replaced by new ones - and continue to be so. If capitalism is true to its development so far, the industries supposedly at the point of market saturation today will be heard of only in history books in the future. It should also be noted that devices exist - from proverbially "reinventing the wheel" to built-in obsolescence - which ensure that the long-term growth in cars, televisions and many other lines of production continue apace. There used to be near-physical market saturation for black-and-white TVs, but did that stop growth in the market for television? - Hitachi, Sony and Ferguson are testament to the fact that it did not. The manufacturers replaced black-and-white with colour, then brought out VCRs, then replaced colour mono with colour stereo, then stereo with surround-sound. Market saturation disappeared in a flurry of pound notes and dollar bills.

In truth Davidson and Rees-Mogg have a far better argument than Marchetti's to justify their view of the major world economic slowdown. Their second, more plausible view, is that capitalism is currently drowning in an ocean of debt:

Debt cannot go on compounding faster than output forever. At the rate it expanded in the United States in the 1980s, interest payments would consume 100 per cent of GNP by the year 2015. No such thing will happen. Long before debt reaches that extreme, it will be wiped away...One way or other we expect a great reckoning. A settling of accounts. We expect the long economic boom and credit expansion that began with World War II to come to an end. The end, when it comes, will not only reveal the insolvency of many individuals and corporations, it may also bring bankruptcy to the welfare state and breakdown of authority within political economies.

There is more than a grain of truth in this. In many world economies, debt is compunding at a faster rate than income and total world indebtedness, by every yardstick that can be named, was heavier at the start of the present slump than at the beginning of any other. In the United States alone the rate of debt to national GNP is now 195 percent, compared with 120 percent before the 1929 crash.

History has demonstarted that sustainable recoveries only begin when a considerable portion of debt built-up during the boom has been liquidated. If debt liquidation is insufficient, growth will remain sluggish even when "recovery" has supposedly begun, such as at present. Davidson and Rees-Mogg estimate that the amount of debt still to be liquidated during this slump in the US is three to four trillion dollars-worth.

The extension of credit effectively delays the onset of capitalism's periodic economic crises only to make them worse when they finally occur. In all economic booms some industries over-extend their operations in the pursuit of further profits and find that they have overproduced for their particular markets. A case in point in the present slump was the commercial property sector.

Perilous Situation

While some industries get into difficultie, other sections of the owning class find that their profits are increasing. The banks, acting as intermediaries between the buyers and sellers of money capital, lend out their accumulated capital to the enterprises in difficulty to keep them going. But this cannot generally correct the fundamental disproportion in growth between the industries and uneven expansion in relation to market demand. Through knock-on effects in industry overproduction spreads and the demand for money capital rises, pushing interest rates up. In this way, the mechanisms of credit extension in the capitalist economy papers over the underlying weaknesses in the productive sphere and buys firms some breathing space before the crisis comes - and this usually comes when the demand for credit is highest and interest rates are at their peak. However, the ultimate outstanding debt increases through this process, requiring a much greater "correction" in the slump as capital assets are devalued to bring productive capacity back into line. The result is not merely an industrial slump, but a financial, banking and property crash as well, as in the 1930s.

Davidson and Rees-Mogg see this as the present outlook for world capitalism. Mounting corporate, government and personal debt has placed the world economy into its most parlous situation for decades. They are all too aware that the only way out for capitalism, sooner or later, is a financial reckoning which will bring about a growth in poverty, a reduction in social welfare programmes and possibly more armed conflict between nation states.

Their analysis of the situation ends there. There is no prescription for how the slump can be avoided - e must just let it wash over us. The authors are completely blind to how the world might be organised to avoid financial slumps, without the market mechanisms which causes them in the first place. They dismiss the Soviet Union's model of capitalist planning out of hand, as well they might, but in doing so claim that this proves socialism to be an impossible dream. Particularly crass is a chapter on the fall of the Eastern Bloc - which socialists predicted - containing the assertion that this demonstartes the failure of Marxism. Indeed, some of the cooments in this chapter, like the assertion on page 188 that workers exploit capitalists rather than the other way around, defy rational analysis and are completely at variance with the otherwise coherent account presented. But, of course, the likes of Davidson and Rees-Mogg want workers to think that there really is no alternative to capitalism, however bad it may be, and that, despite everything, workers still get a good deal out of the system. Unluckily for them some of us know different.

Dave Perrin. Socialist Standard, August 1994.

An Alternative Queen's Speech

(A text to be read before the real thing on Christmas Day.)

I'm speaking to you today from Sandringham - or is it Balmoral? No matter, it is one of the big houses or palaces I own and every Christmas Day I intrude on whatever enjoyment you might be having to foist a boring speech on you which is supposed to strike a thoughtful, humane note among the celebrations. I'm sitting in a sort of study and behind me is a window which opens onto the lush estate where my house stands.

I own these places because I'm a very rich woman - in fact about the sixth wealthiest person in the world and I'm worth about £3,340 million. Although I was born into this wealth and have never known what it is like to be poor, I shall be talking to you as if I was the sort of ordinary, everyday mum you're likely to have a chat with in the bus queue or in the doctor's waiting room or at the supermarket check-out. Except that I am the mother of the nation (for my recent ancestors it was the Empire) unless Margaret Thatcher manages to take that bit over as well.So for this broadcast I compose my face into the maternal expression - calm, caring, perceptive, wise.

A lot of people seem to believe it is my speech, all thought up by me. Well I do have a say in it but it's really what the people I work for tell me to say. I'm what is called a constitutional monarch - I do what the government tell me - and if I kick over the traces I will end up like my Uncle Edward.

Whatever is in my speech the media will report it as if it's really profound, earth-shattering, historical. They'll dredge through the frigid platitudes in the hope of finding some small nugget of humour, or controversy or intelligence. Then they'll blow it up into a big headline - "Queen Says War's A Killer", that sort of thing. I don't blame them; media people are like everyone else - except those like me - they have to work for a living.

In case my speech comes over as too boring and trivial I try to touch on some real problems which you might be experiencing. Like being homeless or struggling with life in a slum or in a high rise or battling to keep up with the mortgage on a regimented semi somewhere. This is a bit of a cheek, coming from someone who owns these big houses but I can't let on about the real housing problem - like shopping at the supermarket or having to queue for the doctor it's part of the wider poverty of all who work for their living.

This being Christmas I have to say something about children, to fit in with all that schmaltz about liitle faces aglow around the tree and so on. I drop hints that childhood is not like that - about violent, broken families, drugs, crime, dead-end years in comprehensive schools. It wasn't like that for my children; they had the best of everything, their schools carefully chosen and their whole lives based on the confidence that they would never want for anything. Perhaps that's why I get so upset at all those news items about Koo Stark and so on.

I often refer to problems abroad which, I say sadly, are casting such a blight across the joys of this great Christmas festival. Like war, famine, epidemics - always easy to talk about because they are going on somewhere all the time, wiping out millions every year. I pretend they're like social quirks which would go away if the Christmas spirit- peace on earth, goodwill to all, and so on - were allowed to last all year. Some people might be awkward and ask about these problems being knit into the fabric of the social system which awards these great privileges to me and forces degradation onto you. But they're obviously suffering from a lack of Christmas spirit.

And that brings me to Christmas itself. All those singing cash registers. All that rubbish being sold. All that nonsense spouted from pulpits and in programmes like this one. I try to forget that Christmas is only a short break in the routine, year-in year-out, exploitation, poverty, conflict and insecurity which you endure and the wealth and capital accumulation which keeps me so cosy. That's what destroys people's hopes, distorts their lives, represses them, kills them. And I'm one of its most prominent figureheads.

But I mustn't go on like this. My job is to encourage the most massive diversion of your attention from reality into a circus world of noise and colour. Remember my wedding? My coronation? The jubilee? The weddings of my children? You loved them all, they made you forget where you stand in the social order, what your lives are really like. And that is what I'm supposed to do, in this Christmas Day broadcast for example.

Well it's been nice getting this off my chest - a change from the usual twaddle. Oh, there's something else... Merry Christmas Suckers.

Socialist Standard editorial, December 1988.

the Revolution Bus

the Economic Roots

Chopping up history is a common method of distorting it and preventing anything being learned from it. Chopped-up history comes to us as a series of largely self-contained, unconnected and accidental events which were crucially influenced by the personalities of the leaders of the time. The implication is that there is no overall pattern in what happens in the world, that things would have been different had other people been in charge or if certain events had not coincided. It follows from this that there is no need to make any fundamental changes in society because a bad historical accident at one time can be redressed by a good one at another time.

Mad Dictators versus The Democracies?

The popular account of the last world war goes something like this. After 1918 the victorious Allies made two big mistakes. Firstly, they did not ensure that Germany had been properly finished off as a military power. Secondly, they imposed the Versailles Treaty, a settlement so stringent as to cause a lingering resentment among the German people which was too easily exploited by Hitler, an unusually mad dictator whose consuming ambition was to lead Germany into a conquest of the entire world. Hitler was in league with Mussolini, another mad dictator who was also comical because his belligerent strutting and posturing were a facade behind which the Italian people were disinclined to go to war. His other ally —Japan — was a different matter, for the people there were tradition-bound into a disciplined savagery. These three countries regarded the persecution and murder of human beings as necessary and progressive and they were intent on extending their rule over the entire world. Other countries — Britain, France and America — were democracies. Their leaders were not dictators, they allowed free speech and free association and they treated their people in a humane way. The democracies could not stand aside and allow the dictatorships to take over the world and so, after a few years delay caused by their natural inability to grasp the enormity of Hitler's madness and their laudable reluctance to plunge the world into hostilities, they eventually had no choice out to go to war. After six years of bloodshed which cost at least 15 million dead the dictatorships were beaten, the world recovered from some very nasty historical accidents and all was well.

One of the most obvious flaws in this version is the fact that on the side supposedly fighting for democracy was one of the world's most fearsome dictatorships When Stalin's Russia was forced into the war on the Allied side it had become enduringly notorious for its iron repression of its people, for its ruthless policy of mass murder and for the brutal and cynical way in which Stalin disposed of any opposition among the leadership — normally by killing them off. The fact that "communist" Russia was supposed to be a sworn enemy of Nazi Germany did not stop the two countries, in a typical example of the dirty game called diplomacy, signing just before the war began, a pact of non-aggression guided, they said, "...by the desire to strengthen the cause of peace between the USSR and Germany..." The pact — which, although it was supposed to last for ten years, did not stop Germany attacking Russia in June 1941 — also carved up part of Eastern Europe: Lithuania. Poland, Bessarabia. Russia was not the only dictatorship fighting on the side of "freedom". Poland and Greece could hardly be described as democracies and they too were in the Allied camp.

Meanwhile, neither the "democracies" nor the dictatorships were completely united. Mussolini's government was alarmed by Germany's expansion, in particular the occupation of Czechoslovakia which they saw as undermining their interests in Central and South East Europe. They did consider developing closer ties with Britain and France but instead asserted that the Balkans and the Eastern Mediterranean were Italian spheres of influence and annexed Albania. The French were mistrustful of British policy which, as the pressure from Germany mounted, did not rule out a settlement through offering Germany some colonies, which the French saw as a potential threat to their interests in the Middle East.

The British Empire

More important —more influential — was the antagonism between American and British interests. One of the reasons for the opposition in America to that country joining the war was the well-founded suspicion that American power would be used to protect British possessions and so shore up the British Empire, which with its system of Imperial Preference hampered American industry's exports to valuable markets and its access to vital raw materials. The "aid" which flowed from America to Britain was thickly festooned with strings. In August 1940 the "gift" of 50 US destroyers (which were in any case well past their prime as death-dealing machines) was conditional on American occupation of 8 bases on British territory, from Newfoundland to what was then British Guiana. Purchases of American war equipment were to be paid for by the liquidation of overseas assets and lend-lease was agreed to only on the condition that the British ruling class had exhausted all other ability to pay. In August 1941 the Atlantic Charter was exultantly publicised as a declaration of faith in the war for democracy and the well-being of the human race. In reality it was an undertaking to ensure self-determination and free trade in the post-war world — which effectively meant the end of Imperial Preference.

So the objectives of the war were not as chivalrous and humane as its supporters would have us believe. Of course it is true that Nazi Germany was a vicious dictatorship where all opposition was ruthlessly stamped out and where millions of people were systematically killed simply because they were Jews or gypsies or homosexuals or handicapped. And of course the Allied victory did mean the end of the extermination camps — at any rate in Germany, for genocide, atrocities and mass political murders did not end in 1945. But these were not the objects of the war, except to those who chop up history. The war came as an episode in an established and continuing system of international relations which were an inevitable result of the social system we live under — of capitalism.

Germany's defeat in the First World War, the Russian revolution and America's withdrawal from the post-war settlements left Britain and France dominant, with the onus to strike a balance between the elite powers. As an outcome of the war these two states, already possessing huge empires, also absorbed former German and Turkish colonies so that Great Britain controlled a quarter of the world and, with France, a third of it. "We have got most of the world already, or the best parts of it" was how it was described in 1934 by the First Sea Lord. The fact that the advantages of empire were largely illusory for the ruling class — and wholly illusory for the working class, who were nevertheless so proud and ready to die for their masters wealth and possessions — did not prevent imperialism being seen as vital to everyone's interests. The "have-not" states — Germany. Japan and Italy — demanded to be let into the power system, to expand to be a part of the balance. "As a result of restrictions our economic situation is such that we can only hold out for a few years... There is nothing else for it, we have to act", said Hitler in August 1939.

These demands were given an emphatic political voice, and a great deal of energy, by the Nazis in Germany and the Fascists in Italy. In many ways the policies of both were, to put it mildly, bizarre; they not only hampered the full development of each state's power but also gave the Allies, when the war came, a brilliant propaganda theme which they worked for all it was worth. Telling us all about the racism of Nazi Germany, they forgot troublesome facts like the collusion and encouragement the Nazis had received from so many respected and bellicose British politicians and the persecution of blacks in America.

German Industry and Commerce

The Nazis were not the first post-war German government to work for the overturn of the Versailles Treaty and the re-establishment of Germany as a major European power. These policies had also been expounded by the politicians of the Weimar Republic and the implications were the same for them as they were for the Nazis — the annexing of Austria, perhaps also of Czechoslovakia and the extension of Germany's sphere of influence into eastern Europe and the Balkans. Behind the policy stood German commerce and industry with their insistent need to throw off the shackles of the post-war settlements and to expand. When Nazi Germany moved militarily the country's commercial and industrial interests eagerly followed the victorious armies. German banks quickly took over their competitors in Austria and Czechoslovakia and the industrial combine IG Farben did the same to its rivals in those countries so that it became the dominant chemical concern in South East Europe.

Although the Versailles Treaty was supposed to have sorted out the world's problems (for what else were those millions of workers killed in the first world war?) the stresses and crises which followed in peacetime produced a clutch of other treaties, each attempting to deal with a separate point of tension. But the diplomatic edifice erected in the 1920s was severely damaged by the world economic collapse. Collective action became distinctly unfashionable as each country scrambled to protect the wealth and the standing of its ruling class. Tariff barriers went up and Britain abandoned free trade in favour of imperial preference. The industrial powers suffered massive unemployment, with up to a third of their workforces being idle. The despair and disillusionment with parliamentary democracy which this caused undoubtedly helped the Nazis rise to power as they could blame the economic collapse on alleged corruption and bungling of tne Weimar republic and assert that it would not have happened in a racially pure, virile and disciplined Nazi dictatorship.

In 1931. in response to the slump, Britain went off the gold Standard — that is, declared that the pound was no longer convertible into gold. As a result a number of ad hoc arrangements for international payments emerged with the "outsider" powers such as Germany and Japan entering into bilateral trading deals. This effectively divided the world into two antagonistic blocs — the gold—possessing states and those now reliant on barter. The German ruling class fought their side of the conflict by dumping exports, importing through bulk buying, currency controls and the like. The British government fought back with export guarantees and in 1938 buying up the entire wheat crop of Rumania in an effort to prevent that country being absorbed into Germany's sphere of influence. In general the Germans made the running in this race and British and French capital became more and more excluded from eastern Europe.

For the British and French capitalists the German threat to Poland was the sticking point, beyond which there could be no further attempts at diplomatic appeasement or economic warfare. The invasion of Poland left the Allies with no choice but to try by military means to force Germany back into "normal" trading relationships. Behind all the talk about a war to defeat dictatorships and to liberate Europe from the Nazi thrall the real war aim of the Allies was to restore the financial and trading arrangements which benefitted their ruling classes. In July 1944, while some of the war's fiercest battles were being fought, the bloodless battle of Bretton Woods settled a lot about the economy of the post-war world The Conference set up the International Monetary Fund and the World Bank as the main instruments of a new international payments system based on currencies convertible at fixed rates into gold and, as the Daily Express complained for years afterwards, was another large nail in the coffin of Imperial Preference.

Far from being an historical aberration the Second World War was a predictable episode in capitalism; it was normal to a social system which throws up rivalry and conflict all the time. Those who chop up history, treating the war as if it were a separate incident, unique because of the personalities of the leaders at the time — lunatic Hitler, conceited Mussolini, and Chamberlain — spread confusion and misunderstanding. To understand why that war happened is to understand a lot about society today, and about why it operates as it does. This is a matter of great urgency, if we are to organise the world so that war is abolished. After all, those millions who were killed in the war were supposed to have given their lives to make the world safe for peace yet look at what has happened since 1945...

Ivan. Socialist Standard. September 1989

the Party During the War

What was never to happen again did in fact happen. In September 1939, after months of negotiations, appeasement and sabre-rattling, war was declared against Germany; a conflict that was soon to engulf the world. It was to prove a testing time for the Socialist Party of Great Britain. The Party's opposition to war had been well-publicised since our formation in 1904. Our Manifesto in August 1914 ended with the classic passage: "Having no quarrel with the working class of any country, we extend to our fellow workers of all lands the expression of our goodwill and Socialist fraternity, and pledge ourselves to work for the overthrow of Capitalism and the triumph of Socialism The World for the Workers!" A similar manifesto was published in September 1939.

The socialist case against war is unique but logical, arising from an analysis of capitalism and our opposition to it. Capitalism, based on class ownership of the means of wealth production and distribution, generates a relentless search by the various capitalist powers for markets and sources of raw materials. These are essential ingredients in the ever-growing chase for profits — the life blood of the system. The capitalist class tries to solve this antagonism between powers by diplomatic measures, or the turning of the screw by the more powerful on the weaker. But if this fails then war can be the outcome, and even in this age of nuclear annihilation the threat of war still dominates the foreign policies of in particular the major powers. So the socialist opposition to war is not a pacifist or a moral one but an inescapable conclusion of our general case. The total abolition of war and the threat of war will only be realised with the overthrow of capitalism and the restructuring of society on the basis of common ownership and production solely to meet human needs. For a more detailed analysis of our attitude to war there is no better reading than our pamphlet The Socialist Party and War.

Refusing to Fight

During the war our organisation had much to contend with. Our Head Office at Great Dover Street was almost demolished by a bomb, with the loss of many records. Strict paper rationing reduced the size of the Socialist Standard. The introduction of the wartime Emergency Powers legislation restricted what our writers and speakers could say, although this never prevented us from propagating the socialist case including our opposition to war.

But what of our members? We would all have a different tale to tell. Some, due to personal circumstances such as the pressures of family responsibilities, had to take on military service of some form or another. For the overwhelming majority of military age, however, it was a period of Conscientious Objectors Tribunals or of "being on the run". Adopting the latter course, I am sure, needed a certain type of personality. They had no identity papers, or perhaps forged ones, no ration book, and had to take any job where no questions were asked. These members were constantly on the watch for police raids to catch deserters from the armed forces. It was not an easy life. Finally, for those caught up in the military machine who then adopted the socialist attitude to war, it was sheer hell. These members, but a handful, would have a harrowing tale to tell.

For this writer, it meant registering as a Conscientious Objector when the call-up day arrived. The socialist case against war had been argued many times at different Tribunals, sometimes with success, but individual cases were largely a matter of luck. You could win or lose, and I lost. The Fulham Tribunal, where I appeared, was chaired by Judge Hargreaves and included a very nasty trade union representative — Mr Swayles — who certainly had no time for the SPGB and was particularly offensive to those appealing on religious grounds. I was turned down at the Tribunal and again at the Appeal Court and eventually served my sentence in Wormwood Scrubs Prison.

As a kid I had often played football against the walls of this establishment, little thinking I should ever be on the other side. To be locked up in a cell on your own for 20 hours a day is not only frustrating but boring. One library book a week was allowed; my choice one week was The History of Cycling which began at page 28: the other pages had been torn out by other prisoners as cigarette papers. The food, needless to say, left a lot to be desired. My training in sewing mail bags for the Post Office was not quite in the same category as the present government's training schemes; it did nothing for my future. An opportunity, during my daily exercise, to engage in conversation with a member of the Independent Labour Party (also in prison for his opposition to war) was the highlight of my stay. There were other SPGB members in the Scrubs at the same time, but "residing" in different blocks we had no contact. Rumours abounded: that all COs were to be released or moved into the country; that the Germans were suing for peace. Eventually another Tribunal did give me my freedom, and once again I joined my fellow members in the struggle. For a period land work in the heart of Sussex curtailed my activities, but I was soon to return to London to work for socialism, with all the enthusiasm of youth.

Socialist Activity Continues

It was a period of unprecedented outdoor meetings — Hyde Park, Woolwich, Finsbury Park, East Ham, to name but a few in London. Out of London there were Glasgow, Birmingham. Manchester and Bristol. The socialist case was heard by thousands of workers. Most of the audiences were tolerant and by no means antagonistic to the Party. This was very marked at Beresford Square, Woolwich, where a majority of the audience were often soldiers from the nearby barracks. There were of course the oddballs who wanted to drag you from the platform, or even have you shot, but such incidents were rare.

In Hyde Park the meetings were often interrupted by an air raid and we would beat a hasty retreat with shrapnel falling around from the anti-aircraft guns in the Park. The most vicious and unpleasant hostility came from the members of the Communist Party. They had wriggled this way and that way during the first months of war, and when Russia was attacked there was no greater supporter of the war than the CP. They would congregate at our meetings, hurling abuse at the speaker singing tne virtues of Stalin. Do they ever think back on those days?

May Day in Hyde Park was always a great occasion, with hundreds milling around the various meetings. The SPGB on that day hired a coal cart from which to speak, the horse contentedly grazing nearby out of harness. A panel of speakers would enable the meeting to carry on for 5 or 6 hours non-stop, and it was the one occasion when you could get away with selling literature in the Park. In those days the police always required the names and addresses of the speakers and usually asked what the subject was too.

Indoor meetings when the war first commenced were a non-starter because of the fear of air raids, but as things settled down so we filled Conway Hall time and again. There were good literature sales, bumper collections and enthusiastic audiences. I recall my first indoor lecture — 'Can Capitalism Cure Unemployment?' — one of a series run by Bloomsbury Branch at the Trade Union Club near Leicester Square. That I still speak on the same subject today says little for the ability of capitalism to cure this problem. I was soon speaking indoors and outdoors both in London and the provinces, and also ran a speakers' class. Leaving aside the sheer brutality and waste of the war, they were exciting times. Sadness would creep in when the death of a comrade was announced — killed by a bomb.

Competing for capitalism

After the bombing of Great Dover Street we set up headquarters in Gloucester Place, a stone's throw from Hyde Park. It was a grand house with well-proportioned and decorated rooms, and on winter evenings classes would be held on economics, history, politics, etc. Our next home in Rugby Chambers, Rugby Street, was the scene of many heated debates on the Executive Committee with plans aired for extending our propaganda in the provinces. The unofficial HO at this time for many London members was Lyons Corner House at Marble Arch. A pot of tea would last for hours as discussion took place on political matters, and many a speakers' list was drawn up by the Propaganda Committee at those tables.

The war years saw an intense concentration of propaganda, culminating in our first parliamentary election contest, in Paddington North in 1945. The war in the Far East was still going on; the class war in which we were engaged has never stopped. May its end be not too long in coming

CM. Socialist Standard, September 1989

A Professor Defends Capitalism

Serious consideration of alternatives to capitalism needs to address: the nature of capitalism; its validity as an instrument of progress; the threat from existing alternatives; and the plausibility and cost/benefit ratio of socialist alternatives.

The nature of capitalism

The real nature of capitalism is widely misunderstood, especially by intellectuals. Over and above ignorance, there is widespread prejudice.This serves to confuse description with evaluation, and fosters naive wish-fulfilment.

Capitalism is not inherently or by definition exploitative, cruel and arbitrary, or unjust. These are empirical issues, to be judged as part of the objective evaluation of capitalism in terms of relevant evidence and reasoned argument.

Capitalism is a specific mode of organising society, and in particular the economy. It is a recent and rare phenomenon in human social development. It should not be confused with other completely distinct forms of social organisation.

Capitalism is characterised by: cultural individualism; private property; private ownership and control of capital; effective laws of contract; competitive markets shaped by the pursuit of profit; the key role of entrepreneurs; real prices; free labour; liberal political democracy; and limited government.

The benefits of capitalism

By comparison with other systems, capitalism has one major built-in advantage. The freedom which it structurally requires, permits it to learn from its mistakes, and to adapt flexibly and rapidly. In addition, analysis of the historical record demonstrates, quite contrary to socialist allegations, that capitalism has powerfully beneficial effects.

It creates massive wealth, dissipates it widely, and destroys poverty. The "poverty" celebrated so noisily by the Poverty Lobby is "relative poverty" for the most part. This is inequality rather than genuine poverty.

Capitalism requires some—modest and changing—economic inequalities, to provide incentive and aspiration. But capitalism eliminates destructive social in¬equalities. It keeps even economic in¬equalities modest by comparison with all save primitive societies.

Socialists' moral castigation of capitalism is as unjustified as their economic critique. Empirical research reveals — despite recessions and the risk of unemployment — extraordinarily high levels of work and life satisfaction, widespread positive commitment to opportunity and social mobility, and remarkable achievements in self-expression and spiritual development. Moral denunciations of capitalism, such as Erich Fromm's The Sane Society, are invariably emotional, hysterical, and contradicted by the evidence.

Immigrants flood out of all sorts of evil systems into capitalist societies. They are pursuing, first, an escape from poverty, secondly freedom, and third, the dream — which is no mere fantasy — of a good life for themselves and their families in the truest sense of the concept of good so far available. Ironically, it is the supposedly destructive features of capitalism — property, profit, competition, and the market — which are the sources and causes of its economic and moral success and its magnetic attraction for outsiders.

Real alternatives

There are existing alternatives to capitalism which challenge its pre-eminence. They do this either as rivals' for control of humanity's destiny — for example Islamic theocracy, and the decaying remains of "actually existing socialism"; or as exemplars of the conditions into which we might fall if we lose faith in capitalism — for example the barbarous despotisms of much of the third world.

It is much more likely that we may decay into one or other of these regressive models, than that any of the apparently more positive alternatives on offer will be established. Should that happen, as it easily might if we fail to treasure freedom, democracy, and capitalism, and to protect them from their critics, the future is bleak in¬deed. It was ill-founded socialist criticism of capitalist democracy in pre-war Germany which sowed the seeds of Fascism.

Socialist alternatives

The major alternative to capitalism proffered throughout this century by self-styled socialists has now been exposed once and for all as a moral and economic disaster, and as infinitely worse in every respect than capitalism. "Actually existing socialism" is and always was objectively regressive.

Anti-Stalinist socialists who nonetheless acclaim 1917 remain influential. But the mistakes were as much Lenin's as Stalin's. There is no real threat to capitalism from this quarter.

This leaves the minority of Marxist socialists who have always condemned Lenin and dictatorship, and the idealistic, allegedly non-Marxist, socialists whose anti-capitalist utopianism permeates intellectual life in the free world. Socialism in this sense is a permanently retreating mirage of empirical analysis and defensively resistant to rational critique:

• Its postulate of an infinitely elastic human nature is wholly implausible.
• Its concept of democratic planning as a replacement for the market would impoverish us all.
• Its objections to property, wage labour, competition, economic inequalities, and in the last resort money are grounded in a gross misreading of history and the human psyche.
• Its dream of a "peaceful socialist world" is a major threat to the natural and gradual evolution of a community of co-operatively competing nations, each and all of them prosperous, capitalist, and democratic.

In short, to quote a respected authority, "there is no alternative".
Professor David Marsland, West London Institute.
Key References
P. Berger, The Capitalist Revolution (Gower, 1987). F. Hayek, The Fatal Conceit (Routledge, 1988). D. Marsland, Seeds of Bankruptcy (ClaridgePress, 1988). A. Seldon, Capitalism (Blackwell, 1990).

Marsland's magical capitalism repudiated

Those who seek to defend the capitalist system and prove the case against the socialist alternative are usually disappointing, often pitifully so. Too often they exhibit little understanding of what the system of capitalism is and no serious awareness of what the socialist alternative is. Added to this are archaic notions about "human nature" and "the human psyche" which are the last resorts of the confused thinker. Scratch a pro-capitalist sociologist and you will find a priest, his mind packed full of ridiculous ideas about the immutability of existing human behaviour and social organisation.

Exploitation

Professor Marsland's attempt at defining capitalism is inadequate. He correctly states that "competitive markets shaped by the pursuit of profit" characterise capitalism, but also speaks of "free labour". In fact, the pursuit of profit is only achievable on the basis of exploited labour.

Unless labour power is legally exploited, unless, that is, wealth producers are paid wages and salaries which are less than the value of what they produce, not a penny, cent, rouble or yen of profit could even be produced. But for Marsland it is simple enough to state that "capitalism is not inherently or by definition exploitative". Without the exploitation of wage labour, how on earth does he think capital could ever be accumulated?

Socialists are urged by the professor to evaluate capitalism empirically and objectively. This is good scientific advice and we take it seriously. Alas, the educator needs to be educated, for, as well as his failure to explain how profits can arise other than through exploitation of wage labour, our opponent makes several wildly unjustifiable observations about capitalism which are empirically false. We shall deal with just three of them.

Wealth, waste and want
Firstly, we are told that capitalism "creates massive wealth, disseminates it widely, and destroys poverty". Capitalism creates massive wealth — and is faced with periodic crises of overproduction, which means that too much wealth has been produced for the market. So, food is dumped or locked in warehouses and farm owners are paid subsidies to take land out of cultivation while in other parts of the capitalist world (capitalism dominates the whole planet) every single year 15 million children under five die of starvation and malnutrition-caused diseases. Society is capable of producing the "massive wealth" of which Marsland boasts, but the profit priority dictates that such potential abundance be constrained or destroyed.

The claim that capitalism disseminates wealth widely is absurd. In fact, in Britain the richest 10 percent own half of all marketable wealth and the poorest 75 percent of the British population,
i. e., the vast majority, own less accumulated wealth than the richest 5 percent (Economic Trends, October 1990). This extreme wealth concentration in the hands of the privileged few is the basis of capitalism.

More crazy still is the claim thatcapitalism "destroys poverty". Poverty is defined by socialists as the gap between wealth (goods and services) which is produced and what workers have access to. But even on the Conservative government's own empirical data, "official poverty" (the number of people forced to live on less than half the average income) has increased from just under 5 million in 1979 to just under 12 million in 1988 (Daily Telegraph, 23 October 1991). So, according to sociologists working on data supplied by the government which Marsland has faith in, poverty has increased, not been destroyed. Professor Marsland should go and tell the homeless beggars on the streets of London, whose numbers grow by the week, or the starving millions in the world whose kids scream with hunger pains, that capitalism "destroys poverty".

Insoluble problems

Secondly, we are informed that capitalism "learns from its mistakes" and adapts "flexibly and rapidly". This is a justification for the futile policy of reformism, of patching up capitalism. We challenge Professor Marsland to tell us of one basic problem of capitalism, from homelessness to unemployment to racism to pollution, which any government running capitalism has ever remedied. All of these problems have been presented as "mistakes" to be rectified by government reform. In fact, these problems are endemic to the system of production for profit.

Increasing misery

Thirdly, capitalism is said to offer "extraordinary levels of work and life satisfaction" and critiques of capitalism by writers such as Fromm are dismissed as being "invariably emotional" and "hysterical". Such abuse is easy, but it is less easy for pro-capitalist sociologists to explain away the escalation of a massive, escapist drug culture, the rise of frustrated urban violence, the existence of mass tranquiliser addiction caused by anxieties generated by ruthless competition and dull frustration, or the fact tha millions of workers fear the indignities of old age or the living hell which characterises numerous boring jobs. It is not "hysterical" to recognise the widepread sense that the quality of life is worsening under the strain of the profit system, but to ignore the increase of working class misery is to display an insensitive unwillingnness to face the facts.

What "socialism"?

Professor Marsland misunderstands capitalism, but is totally in the dark about the meaning of socialism. He seems to think that it exists somewhere, but does not tell us where. He rightly observes that Leninism-Stalinism offered "no real threat to capitalism", but then repeats the foolish remarks of those who refer to Leninist state capitalism as "actually existing socialism". With confused definitions of this kind, what hope is there for our opponent to have anything sensible to say about socialism? He opposes "democratic planning as a replacement for the market", but this is probably an attack on centralised, state planning which is a left-wing capitalist policy for regulating the market. We doubt whether Professor Marsland has ever seriously thought about the possibility of real democracy where all resources belong to everyone, production is for use and there is free access for all. If he had, he would not conclude that this would "impoverish us all".

Human nature again

The bottom line of Marsland's attack upon what he dismisses as "anti-capitalist utopianism" is that socialists' idea of "an infinitely elastic human nature" is unrealistic because "property, wage labour, competition, economic inequalities and . . . money" are grounded in "the human psyche". This is unhistorical. All of the above are part of social relationships which did not once exist and need not exist in the future. Money is no more a function of the natural human thought process than were witch burning or slavery. Our opponent is a poor sociologist, but no historian at all. The lesson of history is that society changes. Alas, Professor Marsland does not comprehend the structure of the capitalist present (which he thinks will last forever) nor the nature of the materially-based socialist alternative (which he thinks is not for humans) and therefore, like priests of old, he falls back upon unscientific, morally dubious, metaphysical nonsense about the evil nature of human beings. We pity the wage slaves who are convinced by such pessimistic lack of social vision.

S. COLEMAN.

Socialist Standard, December 1991

Militant Dishonesty

After the Labour Party, which for years was infiltrated by Trotskyists pretending to be bonafide members, we in the Socialist Party are the latest victims of Trotskyist dishonesty.

One of the Trotskyists groups, Militant, has decided to call itself "Socialist Party" and to put up candidates for elections under this name, despite the fact that we have been using this name for over 90 years.

This is the name we used on the ballot paper at the last general election (when Militant was campaigning for the laughable objective of "Labour to Power on a Socialist Programme!"), in the 1994 European elections, and in the Littleborough and Saddleworth parliamentary by-election in 1995 as well as in various local council elections and a council by-election in Lambeth last year. It is also the name under which we will be standing 5 candidates (in Glasgow, London, Jarrow, Easington and Livingston) in this year's general election.

We contest Militant's right to use this name, on two grounds. First, it is the name we use and one political group cannot simply come along and take the name used by another, long-standing and well-established, political party. This is an elementary democratic principle. To work properly, political democracy depends on people being able to make an informed choice, one condition of which is that different political organisations should be distinguished by separate names. Nobody is likely to confuse our policies and those of a Trotskyist organisation, but when a Trotskyist organisation uses the same name as us there is bound to be some confusion, so undermining the democratic process (not that Trotskyists, as Leninists, will be concerned about that).

Secondly of course, Trotskyists aren't socialists anyway. But who are Militant and where did they come from?

Who are Militant?

In the 1940s three Trotskyists arrived in Britain: Tony Cliff (fromPalestine), Ted Grant(from South Africa) and Gerry Healy (from Ireland). Each was destined to become the guru of one of the three main Trotskyist sects that were to emerge in Britain.

For a while all three worked together as members of the same organisation, the Revolutionary Communist Party, which existed for a few years after the War as an independent Trotskyist party. Then they went their separate ways, except in so far as all three of them joined the Labour Party.

Cliff, who had come to accept the view that Russia was state capitalist, started a paper that later become Intertional Socialism, and a group that is now the SWP. Healy and Grant stuck with the Trotskyist dogma that Russia, even under Stalin, was a "Workers' State" albeit a "degenerate" one, but they fell out over some obscure question of "tactics". Healy started a group which eventually became the Socialist Labour League and then the Workers Revolutionary Party. Grant ran a paper called Socialist Fight which was forever praising the supposed achievements of Russia's "planned economy" but still managed to attract a following amongst young Labourites on Merseyside. It later changed its name to Militant.

Until 1968 all three groups pursued the Trotskyist tactic of boring from within the Labour Party known as "entryism". By far the most successful was Healy who managed to capture the Labour Party's youth section, the Young Socialists, and their paper Keep Left.

After 1968, and the students' revolt and general strike in France which convinced them that they no longer needed the Labour Party as an intermediary to "make contact with the working class", both Healy and Cliff withdrew their followers from the Labour Party and eventually set up their own parties and put up candidates against Labour (Cliff only briefly, Healy with money from Colonel Gaddafi).

Grant, however, decided to hang on inside the Labour Party where he now had a virtual monopoly of the Trotskyist franchise. In one sense this was a shrewd move and in the '80s he was to be even more successful in infiltrating Labour than Healy had been in the '60s.

Grant's group, ostensibly just another pro-Labour paper like Tribune but in reality an undercover vanguard party named the Revolutionary Socialist League organised on strict Bolshevik lines, virtually captured Liverpool Labour Party (Derek Hatton has been their best-known member) and managed to get two of their members, Terry Fields and Dave Nellist, elected as Labour MPs. From the mid-80s the Labour machine counter-attacked. Grant and his followers were booted out of the Labour Party and Fields andNellist were de-selected.

Militant was now on its own, in what it had up till then regarded as the political wilderness. What to do? Was political life possible outside the Labour Party? Grant himself didn't think so and was for carrying on with "entryism" and trying to get back into the Labour Party clandestinely. Most of the other leaders regarded this as pointless; they were outside the Labour Party and would have to make the best of a bad job by acting as an independent organisation even if still telling people to vote Labour.

Grant was eventually expelled at the beginning of 1992 and yet another Trotskyist sect was bom. Militant changed its (public) name from Militant to Militant Labour. The tactic was adopted of putting up candidates against Labour at local council elections and by-elections, with some success in that one or two were elected councillors, in Glasgow and Liverpool.

When Scargill left the Labour Party last year and set up his "Socialist Labour Party", to an outsider it might have seemed obvious that Militant Labour and the Scargill Labour Party should join together — after all, both of them had the same policy, militant Labourism — but this was to overlook the fact that Scargill was a Stalinist who was determined that his party should not be infiltrated and perhaps taken over by some Trotskyist group (not that this has prevented some of the lesser Trotskyist sects having a go).

Talks between Scargill and Militant did take place but broke down, so Militant decided to set up a rival Old Labour party of its own. But what name to call it? Apparently, there were three options, Militant Labour Party, Militant Socialist Party and Socialist Party.

The name "Socialist Party" of course wasn't free as the leaders of Militant were well aware. Being part of it themselves, they are not ignorant of the minority political scene in Britain and have seen us selling the Socialist Standard ("journal of the Socialist Party") at the same demonstrations and on the same street corners as they sell Militant. Their leaders have been aware of our existence since their foundation and we have engaged them in formal debate and long intervened at their meetings in opposition.

This, however, did not stop Militant's leadership recommending "Socialist Parry" as the preferred option to a special conference held at the end of last November. According to the report in Militant (6 December), there was some opposition. Although 71.4 percent of delegates voted for, 24.8 percent voted for "Militant Socialist Party" and 3 percent for "Militant Labour".

So, an element of confusion has been introduced onto the British political scene: there are now two organisations calling themselves Socialist Party and two organisations putting up candidates at elections under this name. This is entirely the fault of a dishonest and cynical move by Militant to try to hijack the name used by an already-existing political organisation.

Naturally, we will oppose this move in every way we can but we are obliged to issue a warning to our sympathisers and others who know us: look twice before buying any pamphlet bearing the name "Socialist Party"; if you find it praising pre-Yeltsin Russia's "planned economy" or advocating fantastic reforms of capitalism then (obviously) it is not published by us but will be the usual Trotskyist nonsense. If you go to a meeting advertised as by the "Socialist Party" and the speaker advocates a "£6 minimum wage" or "Nationalise the Top 200 Monopolies" or that "the TUC call a General Strike Now" you will know you have been misled; stand up and say that the speaker is a fraud for pretending to be speaking on behalf of the Socialist Party.

Labourism with knobs on

But quite apart from the dishonesty of trying to steal our name, Militant does not stand for socialism It stands for state capitalism as its long-term aim while campaigning in the present for mostly impracticable reforms of capitalism.

There is a twisted logic to their campaigning for impracticable reforms. As followers of Lenin, Trotskyists hold that workers are incapable of directly understanding socialist ideas; at most, they can only acquire a "trade union consciousness" which reflects itself on the political field as support for reformist, Labour Party-type politics. In these circumstances to campaign directly for socialism (as we in the real Socialist Party do) would be to cast pearls before swine, mere "abstract propagandism". Instead, what a "vanguard party" must do is to try to use this workers' reformist discontent as a battering ram to overthrow the government and seize power for themselves as Lenin and the Bolsheviks had done in Russia in November 1917.

Trotsky recommended that this be done by offering workers reforms (called "transitional demands") which the vanguard party knows perfectly well can't be obtained under capitalism, in the expectation that when these reforms are not granted the workers will turn against the government and support a Trotskyist coup d'etat.

This of course is pure science-fiction politics that is only likely to come true on the planet Zanussi but (fortunately) not on planet Earth. Imagine what a Trotskyist dictatorship would be like; not too difierent from a Stalinist one, we would suppose.

In the context of the electoralist tactic that Militant has now adopted, "transitional demands" translate as extravagant election promises of reforms to be achieved under capitalism, bait offered to the mass of worker-electors who are still perceived of as not being able to move beyond a reformist, Labourist consciousness.

At election times, Militant Labour appears as a super-reformist party, promising the same sort of reforms as Labour only bigger and better ones. Thus, if Labour promises a minimum wage of £3 an hour, Militant Labour promises one of £6. If Labour promises to increase spending on education and the health service by 10 percent, Militant Labour promises to increase it by 50 percent. If Labour promises the highest achievable level of employment, Militant promises full employment, and so on. In other words, there is no attempt to combat reformist illusions within the working class (the illusion that capitalism can be reformed to work in their interest); just the opposite in fact, such illusions are encouraged and magnified.

Militant, by accommodating itself to this attitude instead of campaigning to change it, is encouraging workers to believe that their problems can be solved within capitalism if only those they elect as local councillors and MPs were more demanding and more determined.

It is in fact on this basis that Militant's local councillors have been elected: as militant Labourists, as people who some traditional Labour voters feel will sincerely fight for the reforms that New Labour under Blair has abandoned. "Militant Labour", the name under which they were elected, was an entirely accurate description as what those who elected them wanted was someone to fight in a more militant way for Labour's traditional aims.

Militant's Ideal World

Militant would deny this charge of encouraging reformism — of in fact being militant reformists — by pointing out that they do say that capitalism can never work in the workers' interests. This is so, but by "capitalism" they only mean competitive, private enterprise capitalism, to which their alternative is planned, state-run capitalism not socialism.

Last year Militant (22 March) carried an article headed "Fighting for our ideal world" which ended: "Militant Labour demands:

• An end to slave labour schemes;
• £6 per hour minimum wage;
• The right to join a recognised trade union"

Hardly an inspiring ideal (and this was in an article aimed at young people!). Normally, it is true, Militant's "ideal" is not quite as crass as this but the principle is the same. In 1995, at the time the Labour Party was preparing to ditch Clause 4, Militant brought out a pamphlet called What is Socialism? in which they declared:

Militant Labour believes it is possible to achieve a minimum wage, full employment, good education and health services. Homelessness can be a thing of the past. We can end inequality and poverty.

But we would also need an economy which produces more than it does today and produced different things: for example, fewer office blocks and more houses at affordable prices or rents, fewer weapons and more public transport.

This ideal world of higher wages and affordable prices is to be achieved by nationalising all "the major companies and financial institutions".

Such wholesale nationalisation would not be socialism which is based on the common (as opposed to state) ownership and democratic control of productive resources, with goods and services being produced and distributed directly to satisfy people's needs with the disappearance of wages, prices, pensions, banks, money and all the other products of a buying-and-selling society such as capitalism.

Militant's "ideal society" turns out to be a state capitalism in which a government, supposedly ruling on behalf of the working class (but in reality controlled by and for the benefit of the leaders of the vanguard party), tries to plan the wages -profits-money system and make it work in the interest of all.

They give Cuba, and previously Russia, as an example of the sort of "planned", "non-capitalist" economy they have in mind ("Can Cuba Survive?",Militant, 22 March 1996), not as a perfect example but as a sufficiently successful example to back up their claim that a nationalised, planned economy of the kind they propose can work. But both Cuba and pre-Yeltsin Russia had state-capitalist, not non-capitalist, economies. Neither the Russian nor the Cuban revolution "overthrew capitalism", as Militant claims. What they did was to change the personnel of the privileged class that was to preside over the accumulation of capital in these countries, from private capitalists and outside imperialists to a Party elite of state bureaucrats. That Militant see the economic system in Cuba and what used to exist in Russia as a model for what should replace capitalism confirms that they too stand for state capitalism.

But state capitalism is no more in the interest of the working class than is private capitalism. It still retains the wages system, under which people have to sell their mental and physical energies to an employer to get the money to buy the things they need to live. But where the wages system exists so does economic exploitation, since workers are always paid as wages less than the value of the work they do; the rest (Marx called it surplus value) is creamed off by their employers, whether a private individual, a company or a state enterprise, and redistributed as the privileged income of shareholders and/or state bureaucrats.

The Trotskyist proposal to nationalise all major industries and financial institutions and turn us all into state employees does not end the wages system; it merely changes who employs us (where, that is, we are not already government employees of one sort or another) and changes those who live off our work from private shareholders to state bureaucrats.

So Trotskyists like Militant are not even on the same wavelength as Socialists. It is not a question of us and them having the same aim but a different method of getting there — us, democratic political action by a democratically-organised and consciously socialist majority; them, a minority-led insurrection without majority socialist understanding. Their aim is quite different from ours. We want socialism and the abolition of the wages system; they want state capitalism with all of us being paid by the state.

In other words, even if we had some other name such as a World Socialist Party they would still have no justification for calling themselves "Socialist Party". If they had been honest (but that's science-fiction politics again) they would have changed their name to SCP or State Capitalist Party or, if that was felt to be too explicit, simply to "Trotskyist Party".

ADAM BUICK. Socialist Standard, February 1997