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Socialist Standard November 2008 1

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november 2008
socialist standard



10 Crisis and Inflation: Back to the Future? 3 Editorial

Is capitalism crumbling?
Gordon Brown claimed that he had ended the boom and bust cycle.
The current economic crisis demonstrates that normal service has
been resumed. 4 Pathfinders
Crisis? Which Crisis?
5 Letters
13 The end of “neoliberalism”?
What the critics of “neoliberalism” want is a “regulated capitalism”, but
they are not the only ones. 6 Material World
8 Pieces Together
14 Good Cap, Bad Cap
The credit crisis has tarnished the image of capitalism but its defenders 8 Contact Details
may help it live on by pinning all of the blame on financiers.
9 Cooking the Books 1
16 The Russian Revolution recalled God and the Market
Even 90 years after the Russian revolution there are still some who
claim that the event shines as a beacon for socialism. We were able 19 Cooking the Books 2
to say at the time that whatever was happening in Russia it was not a M - C - M’
socialist revolution.
20 Reviews
18 Socialists and the First World War Communist Manifesto; War plc;
This month marks the 90th anniversary of the end of WWI. We recall Our Country Right or Wrong.
the socialist opposition to it.
21 Meetings

22 50 Years Ago
Labour Party Conference

23 Greasy Pole
Subscription Orders The Socialist Party of Lamont - when Cameron got it
should be sent to The Socialist Party, 52 Great Britain wrong
Clapham High Street, London SW4 7UN. The next meeting of the Executive Committee
Rates will be on Saturday 1 November at the address
One year subscription (normal rate) £15 below. Correspondence should be sent to 24 Voice from the Back
One year subscription (low/unwaged) £10 the General Secretary. All articles, letters
Europe rate £20 (Air mail) and notices should be sent to the editorial
Rest of world £25 (Air mail) committee at: The Socialist Party, 52 Clapham
Voluntary supporters subscription £20 or more. High street, London SW4 7UN. 24 Free Lunch in the Future
Cheques payable to ‘The Socialist Party of tel: 020 7622 3811
Great Britain’. e-mail:

2 Socialist Standard November 2008

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Introducing Editorial
The Socialist Party Is capitalism crumbling?
The Socialist Party is like no other Capitalism has never had such a bad between supply and demand, between
political party in Britain. It is made up press as the last few months. Countless producer and consumer, the market
of people who have joined together commentators have given more than a system sends confused, unreliable and
because we want to get rid of the profit passing consideration to the question, skewed information.
system and establish real socialism. Our will capitalism collapse? Whilst this And of course there are some areas of
aim is to persuade others to become hopeful question could be expected to demand that the economic system is just
socialist and act for themselves, emanate from excitable journalists, and not interested in even supplying – be-
organising democratically and without from the rump of what remains of the cause of the low profit returns available.
leaders, to bring about the kind of left-wing throughout the world, it should World hunger is one example illustrating
society that we are advocating in this be noted that the likes of Bill Gates and how the market operates on the basis of
journal. We are solely concerned with Nicolas Sarkozy have been asking similar profit, not human need. There can surely
building a movement of socialists for questions. be few clearer signs of the priorities of
socialism. We are not a reformist party
The real challenge to capitalism how- capitalism than the contrast between the
with a programme of policies to patch
ever is not so much a challenge to its on- painfully slow progress made to address
up capitalism.
going operation – it will carry on in some world hunger over the last few decades,
We use every possible opportunity
shape or form regardless. The last few and the haste with which politicians
to make new socialists. We publish
months are after all nothing other than around the world have responded to the
pamphlets and books, as well as CDs,
DVDs and various other informative a “market correction”, albeit a pretty big banking crisis. The sums of money hast-
material. We also give talks and take part and widespread one. Rather, the chal- ily committed to increase banks’ liquidity
in debates; attend rallies, meetings and lenge to capitalism is one that is of more and stabilise the sector would – if used
demos; run educational conferences; interest to world socialists. to meet real human needs - ensure not
host internet discussion forums, make For us worthwhile social change one person need die of hunger for the
films presenting our ideas, and contest cannot come about blindly in knee-jerk next 23 years.
elections when practical. Socialist reaction to events, nor in the role of pas- Capitalism won’t collapse of its own
literature is available in Arabic, Bengali, sive bystanders as events unfold around accord. But for many millions it has nev-
Dutch, Esperanto, French, German, us. What has become crystal clear over er functioned to start with. Instead the
Italian, Polish, Spanish, Swedish and the last few weeks is the extent to which market system must be dismantled intel-
Turkish as well as English. the experts of capitalism, the self-styled lectually, ideologically and democrati-
The more of you who join the Socialist “Masters of the Universe” were flying cally. A genuine alternative society must
Party the more we will be able to get by the seat of their silk monogrammed be agreed before capitalism can start to
our ideas across, the more experiences pants, with little idea what they were be dismantled in reality, with alternative
we will be able to draw on and greater actually buying and selling. mechanisms emerging to replace both
will be the new ideas for building the Genuine social change will require the market and the state.
movement which you will be able to more than just restricting executives’ bo- If we want to get rid of capitalism we
bring us. nuses, or trying to improve regulation of will need to work at it. That’s why we
The Socialist Party is an organisation the financial services sector, as many are exist: to try and help as one small part of
of equals. There is no leader and there calling for. Even when it is working right, that massive process. If you want to help
are no followers. So, if you are going even when it is booming, the market sys- out in that process – if you want to be-
to join we want you to be sure that you
tem fails miserably to do the one thing come humanity to become a “master” of
agree fully with what we stand for and
it claims as its unique selling point. Far its universe – then please make contact,
that we are satisfied that you understand
from efficiently sending market signals and the sooner we may succeed.
the case for socialism.

Socialist Standard November 2008 3

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Crisis? Which Crisis?
A recent EU study headed by a Deutsche bank economist a worldwide uprising as unlikely as it is utopian.” Showing a
reveals that global economic loss through deforestation is vastly similar knee-jerk horror of what he imagines socialism to be,
greater than economic loss through the current crisis in the Yale environmentalist Gus Speth: “I’m not advocating state
world’s banks (Nature loss ‘dwarfs bank crisis’, BBC Online, 10 socialism, but I am advocating a non-socialist alternative to
October). The study puts the estimated annual loss at between today’s capitalism”, while Daly maintains that “shifting from
2 and $5 trillion. growth to development doesn’t have to mean freezing in the
Graphs of consumption or growth trends almost all follow a dark under communist tyranny.” (New Scientist, ibid).
hockey-stick trend, largely flat for a thousand years until 1900 So, having written off as utopia or tyranny any possibility of
and thereafter rising rapidly to nearly vertical today. These an alternative to the capitalist system, they are driven of course
trends include consumption of water, paper, rainforest, ozone, to consider how best to modify the system from within. What
fisheries, and increases of motor car production, population, they are left with is a mishmash of reforms which have either
CO2 and global temperature, and species extinction. Not been tried in the past (Keynesian inflationary investment), are
surprisingly, the trend for GDP follows the same pattern. even more utopian than the ‘utopians’ (scientists as technocrats
This is capitalism’s normal modus operandi, regardless of dispensing orders to the wealth class), or contradict the internal
banking crises. This relentless profit-driven growth goes on year boom-slump logic of capitalism (zero-growth ‘steady state’
in year out, without respite, and the trends climb higher and capitalism), or would bankrupt by capital flight any country
higher with no end in sight. The world is burning itself out in an which first introduced them (various taxes). At best, the reforms
apparently unstoppable quest for economic growth, and nobody wouldn’t work. At worst, they could accelerate armageddon. If
seems able to do anything about it. capitalism really could be run more equitably and sustainably,
Scientists can only do so much by reporting the facts. For don’t they imagine that it would already be running that way?
instance, they can show that the Earth can sustainably support No, they don’t. They just seem to think that the correct solutions
just 200 million people in a North American lifestyle, a figure have somehow eluded the rest of us because we’re not as
which is not even large to account for North America’s present smart as they are.
population. In answer to the much-loved argument that growth Still, all in all, it is undoubtedly a good thing that scientists
is the only way to lift the poor out of poverty, they can point to are turning their attention to the question of free-market
the fact that, during the 1990’s, the poor’s share of this growth capitalism. They do at least have more credibility than
was just 0.6 percent. According to this argument, for the poor politicians, priests or pop-idols, and one can only hope they
to be even marginally better off, the rich have to become don’t squander it by failing to sort through their various ill-
stupendously richer, so that “to get the poorest onto an income conceived assumptions and prejudices. After all, that’s what
of just $3 per day would require an impossible 15 planets’ worth the scientific method is supposed to be all about. The worst
of biocapacity” (New Scientist, 18 October). and most absurd assumption of all was always that science
Governments of course are very good at ignoring facts was somehow above politics, and that seems to be changing.
they don’t like. One scientist, Tim Jackson, professor of What scientists need to do now however is recognise that they
sustainable development at Surrey University, was accused by are latecomers to the political and economic debate, and that
a UK treasury official of ‘wanting to go back and live in caves’. it is unhelpful to cloud the issues with careless ignorance of
Herman Daly, formerly senior economist for the World Bank, genuine socialist ideas, or to promote unworkable and possibly
describes how the first draft of its 1992 World Development dangerous solutions which ignore capitalism’s known behaviour.
Report contained a diagram showing the economy as a simple Most of all, they would do well to recognise the importance of
rectangle, with an arrow going into it, labelled ‘inputs’ and class in the debate, and their own class position as workers.
another coming out labelled ‘outputs’. When he pointed out If they don’t do that, they are always going to be so far behind
that this implied that the inputs (resources etc) appeared to other workers that they think they’re in the lead.
be coming from nowhere and the outputs (including waste)
going nowhere, thus suggesting that the environment had
infinite productive and absorptive capacities, the diagram was
simply removed altogether from the draft. He remarks dryly
that ‘mainstream economists are mostly concerned with the
[economic] organism’s circulatory system … while tending to
ignore its digestive system.” (New Scientist, ibid).
The problem is that when scientists, for all the right reasons,
try to get political, they don’t seem to realise that they are
in serious danger of reinventing wheels and using them to
cycle over old ground. Worryingly, they show under-informed
prejudices that any socialist can hear any night down their local
boozer, to wit, that a global revolution against capitalism is
utterly out of the question, and that even if it wasn’t, it would be
utterly undesirable. Here’s Susan George on wealth ownership:
“Must we organise world revolution … to save Earth? Is there
a single point of attack? If so, tell me the name of the tsar…
Nor would anyone welcome the political systems that shrouded The original hockey stick. Figure 1(b) from the Intergovernmental
those vast areas where revolution did occur. Somehow… we Panel on Climate Change Third Assessment Report, 2001
need a third way between red-in-tooth-and-claw capitalism and

4 Socialist Standard November 2008

November 08 BDH.indd 4 24/10/08 10:39:22

My Cupboard is Bare the ballot-box. Somehow I do not
think I will be alone.
Language of course also plays
a part in that scourge of the work-
Dear Editors, STEPHEN HAIGH, Barnsley. ing classes, religion. Much of the
Gordon Brown was said to be a great church’s hang up about sex prob-
economist. Whatever model he used We trust that your threat to use your ably derives from young lady being
to predict an end to boom-and-bust pitchfork rather than your vote is erroneously translated as virgin at
capitalism was wrong, however. His just poetic licence. – Editors. some point in history. Also they were
thinking was worse than one who as thorough as any East German
thinks-not. Recently he stated that Stasi thug in preventing information
Labour were committed to reducing getting to where it could harm them.
poverty at the same time as he dou- Language People were burned at stake for the
bled the income-tax burden on the “crime” of publishing or possessing
poorest earners in society. In Man- Dear Editors bibles in the English language at
chester he said this was a “mistake”. I read with interest your article on a time when literacy was not wide-
Are we to take it that the man is sim- Belgium (September Socialist Stand- spread. So afraid were they that the
ply an idiot? No, he is not an idiot, ard). It is also of interest to social- bible should be stripped of its mys-
but a man is revealed by his work. ists to note how the ruling classes in tique if common people who didn’t
Like most in his position his primary Belgium used and in some instances speak Latin could read it in their own
interest is in the retention of power continue to us language to divide patois.
and privilege. The working-poor, and rule. By forcing the majority of COLIN BROWN, Grantham
whose income-tax he doubled, do not Flemish (Dutch) speakers to speak
bother voting, (as he knows) for we,
the low-paid, realise that there is no-
French in education matters and
totally ignoring the small minority of NEW DVD
one worth voting-for. German speakers in the East around
There is no important differ- Eupen they managed to get workers
ence for us, the drivers of buses, the at each others throats just by virtue Poles Apart? Capitalism
of the fact that they spoke a different
cleaners of houses, the makers of
language. or Socialism as the
windows, the maintainers of prop-
erty, the workers in offices, all the Whether socialist society decides planet heats up
low-paid working-men and women to use English, Spanish, Chinese,
of this country, between the Labour Esperanto or any other language as a
and Conservative Parties. What means of communicating with places
politicians call spin we call bullshit which speak a different language will
and we want no part of it. Middle- be entirely a matter for the people
England, on middle incomes, voted concerned to decide and will not be
Labour into power, and for that imposed by the ruling classes. What
voting-base income-tax was reduced is for sure is that in socialism all
in an attempt to retain support for people will be free to speak and learn
Labour. The books were balanced at whichever language(s) they chose.
the expense of the worst-off, with- And I dare venture to say that the
out risk of making the Labour Party enjoyment and pleasure gained by
worse-off. It was no “mistake”, but learning a new language because you
rather a ploy so transparent that at choose to will be immense compared
the next election even fewer of the or- e.g. to the occupants of a country
dinary hard-working women and men being forced to learn and/or use the
of this country will bother to vote. language of someone else choice e.g.
The real “mistake” made was that of British colonies being forced to speak
a government without ideology which English, state capitalist occupied
assumes those of us who vote-not, Czechoslovakia being forced to learn
think-not. Russian or Hungarian speakers in
The front page of the Guardian (30 current Romania being forced to with contributions from Glenn
September) reported that “opposition speak Romanian in the Ceaucescu Morris, Arctic Voice, and Brian
from ordinary Americans killed the state capitalist dictatorship. Gardner, The Socialist Party.
bill” to bail-out their failing banks. Of course some people in social-
Over here, we are repeatedly told ism may choose to speak only their Recorded digitally at Conway Hall,
own native language(s) and rely
by the chancellor that the economic London, 2008.
cupboard is bare. This is certainly on a phrase book if they decide to
true of my cupboard. Yet the cup- travel, what is for sure is that that
£5.00 per copy + £1.25 P & P. Send to
boards in the homes, second homes will be a personal choice rather than
the Audio-Visual Department, c/o Head
and yachts of those who have caused one forced by economic necessity
Office and allow up to 21 days for
and profited-from the banking crisis as in capitalism e.g. Polish speak-
overflow. If the British government ers being forced to speak and learn
makes yet another “mistake” of hav- English if they want to work in the
ing ordinary hard-working British UK (economic migrants). Of course Socialist Standard
citizens bail-out British banks and in socialism people will be free to Bound volumes (2005-2007) for
the greedy millionaires who helped choose where they want to live and £25 plus postage, each, order
work but that choice will be a matter
cause the problem it will be one from HO, cheques payable to
mistake too far and I for one may be of personal preference rather than
“The Socialist Party of Great Britain”
looking to my pitchfork rather than economics driven.

Socialist Standard November 2008 5

November 08 BDH.indd 5 24/10/08 10:39:22

The War Business
Why do capitalist states prepare for and wage war?

s we socialists never tire of companies, such as Halliburton, unable to prevail against the politi-
pointing out, the primary sell logistics and other war support cal stranglehold of Israel’s military-
function of military power in services. industrial complex.
capitalism is to protect and expand The nature of the wars that
control over resources, markets Resource wars, “strategic” wars the US and its allies are currently
and transport routes on behalf of The argument is not that all fighting in Iraq, Afghanistan and
the capitalist class of the country armed conflicts are irrational in Pakistan is less clear-cut. Control
concerned. However, the costs and terms of the costs and benefits ac- of resources, markets and transport
risks that wars and armaments cruing to national capital. Some un- routes is certainly an important fac-
entail for the capitalists themselves doubtedly make good sense in these tor, especially in Iraq, but the likely
often outweigh the benefits to them. terms, as when valuable resources outcome is hardly such as to justify
For example, while the U.S. did can be acquired at moderate expense. the enormous costs involved. While
have real interests at stake in Viet- One example might be the “cod wars” the ultimate motive for war may be
nam in the 1960s and 1970s, those of the 1970s between Britain and Ice- to arrest the decline in the competi-
interests were hardly commensurate land over fishing rights in the North tive position of the US in the world
with the enormous costs of the war Atlantic. Another, perhaps, is the economy, the actual effect is to accel-
it was waging there. Growing aware- ongoing conflict over the Spratly Is- erate that decline (see May “Material
ness of this fact within the capitalist lands in the South China Sea, whose World”).
class eventually led to withdraw-
al. Capitalism and war: two
In other words, states have a models
tendency to act in ways that ap- So we end up with two con-
pear to be irrational even in terms trasting models of the relationship
of the capitalist interests that between capitalism and war. In
they are supposed to represent. the first model, war appears as
an instrument in the hands of the
War – a capitalist enterprise state, which acts as the “execu-
There are various reasons for tive committee of the (national)
this apparent irrationality. But capitalist class as a whole” (Marx).
the main reason is this. War is The second model, unlike the first,
not only a service that the state takes into account the fact that
provides to the national capital- war is evolving from an instru-
ist class as a whole. War is also ment at the service of the national
– and increasingly – a massive capitalist class as a whole into
capitalist enterprise in its own a capitalist enterprise in its own
right, a “war business” that right -- what we might call the war
wields considerable political clout business. The war business has
and has special interests of its special capitalist interests of its
own. own, so it cannot function simply
The core of the war busi- as an instrument of more general
ness, of course, is the so-called capitalist interests.
military-industrial complex. Arms Does the first model represent
manufacturers, like other capitalist oil and gas deposits are coveted by capitalism in its “normal” form, while
firms, seek to maximise their profits. China, Taiwan, Vietnam, the Philip- the second model represents an “ab-
It does not concern them whether pines and Malaysia. normal” ultra-militaristic mutation
the weapons they sell have a cogent At the other extreme, some wars of the capitalist system? Is the first
strategic rationale. have no discernible connection with model rational, in capitalist if not
The military-industrial complex the control of markets and resources. in human terms, while the second
has a direct interest not only in the The recent war in Georgia was in model is irrational? At first sight that
build-up of armaments but in war this category (see October “Material seems reasonable.
itself. War is the only way of testing World”). Although important oil and But is there in fact any good
weaponry under battlefield condi- gas pipelines run through the south reason to regard one model as any
tions. It uses up and destroys old of the country, Russia did not contest more irrational than the other? Each
stocks that then have to be replaced control over them. Russia’s ration- model represents a possible variant
– rearmament is now, for instance, ale for war was “strategic” – that is, of capitalism and a possible form of
the top priority of the Georgian gov- getting into a better position to fight capitalist rationality. The difference
ernment – and stimulates demand in future wars. is that the first model assumes the
general. Again, Israel’s wars are senseless existence of such a thing as “national
from the point of view of the Israeli capital as a whole,” while the sec-
But nowadays arms firms are not capitalist class as a whole, which has ond model envisions only separate
the only large-scale “merchants of a clear interest in a peace settlement capitalist enterprises. Some firms sell
death.” Companies like Blackwater that will give it full access to the mar- sausages, some sell computers – and
sell combat capability directly as the kets and cheap labour of the Middle some sell war.
labour of hired mercenaries. Other East. This interest, however, seems STEFAN

6 Socialist Standard November 2008

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Socialist Standard November 2008 7

November 08 BDH.indd 7 24/10/08 10:39:23

GOT IT? FLAUNT IT! recently bought the Savoy hotel in London
“While most of us are tightening our belts, for £250m and is spending a further £100m
they are planning to increase spending, giving the grande dame of the Thames the
taking advantage of the falling price of kind of makeover that would make Demi
everything from property to private jets. Moore blush. He is also doing up his other
About 80% of those worth £50m or more favourite five-star bolt holes, the George V in
plan to spend more this year, according to Paris and the Plaza in New York. But there’s
a survey by the US-based wealth analysts no place like home. His £500m palace in
Prince & Associates. Take Alwaleed. The Riyadh is constantly being remodelled and
small fortune he dropped on the Airbus is, enlarged. At the last count it had 317 rooms,
BABY, IT’S COLD INSIDE including 20 kitchens that can cater for up to
it turns out, pocket change. The 53-year-old
“The number of households in fuel 1,000 people.” (Times, 21 September)
poverty in the UK rose to 3.5 million
in 2006, government figures show. WORLD HUNGER WORSENS according to ANSA news agency. An FAO
The figures from the Department for “Global numbers afflicted by acute hunger prices index showed global food price rises
Environment and the Department for rose from 850 million to 925 million by the of 12 percent in 2006, 24 percent in 2007
Business show this is an increase of start of this year because of rising prices, and 50 percent over the first eight months of
the head of the UN Food and Agriculture 2008, Diouf added – suggesting the number
one million on 2005 levels. Fuel poverty
Organisation said Wednesday. The number affected is likely to top one billion by the end
is defined as households who spend
of people suffering from malnutrition, before of the year. ‘Thirty billion dollars per year
more than 10% of their income on fuel.
the worst effects of global price rises, ‘rose must be invested to double food production
The Unite union said thousands more and eliminate hunger,’ Diouf said, calling
just in 2007 by 75 million,’ Jacques Diouf,
people are likely to suffer from fuel the figure ‘modest’ in comparison with the
director-general of the Rome-based agency,
poverty this winter. The figures include told an Italian parliament committee, amount many countries spend on arms and
around 2.75 million homes classed agriculture.” (Yahoo News, 17 September)
as “vulnerable” – containing a child,
elderly person or someone with a long- A FRIGHTENING FUTURE office, would serve as a marker for the new
term illness. The number of homes in “Pentagon officials have prepared a new president and is meant to place pressure
fuel poverty in England rose from 1.5 estimate for defense spending that is $450 on him to either drastically increase the
billion more over the next five years than size of the defense budget or defend any
million in 2005 to 2.4 million in 2006,
previously announced figures. The new reluctance to do so, according to several
including an extra 700,000 vulnerable
estimate, which the Pentagon plans to former senior budget officials who are close
households.” (BBC News, 2 October) to the discussions.” (CQ Today, 9 October)
release shortly before President Bush leaves

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Manchester branch. Paul Bennett, 6 Rd, Hethersett, NR9 3JD. Tel: 01603 Geoffrey Williams, 19 Baptist Well 02144 USA. E-mail: wspboston@
Burleigh Mews, Hardy Lane, M21 7LB. 814343. Street, Waun Wen, Swansea SA1 6FB.
Tel: 0161 860 7189 Richard Layton, 23 Nottingham Rd, Tel: 01792 643624
Bolton. Tel: H. McLaughlin.01204 Clacton, CO15 5PG. Tel: 01255 814047. Cardiff and District. John James, 67

8 Socialist Standard November 2008

November 08 BDH.indd 8 24/10/08 10:39:23

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An Inconvenient Question: Socialism and the Environment.............£2.00 x____

Commenting on the current From Capitalism to Socialism: how we live and how we could live....£1.00 x____
Cooking world financial crisis former 1968
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Books 1 that “the belief that the market is
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god is over” (Guardian, 17 Sep- Some aspects of Marxian Economics............................................... £2.00 x____
tember). Someone who should
now more about God, the Archbishop of Canterbury, How the Gods were Made................................................................. £1.50 x____
hopes this is so as he thinks that the Market has become
a rival to his god. Marxism and Darwinism by Anton Pannekoek...................................£1.50 x____
In an article in the Spectator (26 September) Dr
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ists” of breaking the First Commandment – “Thou shalt
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have no other gods before me”. He even called in Marx
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capitalism became a kind of mythology, ascribing reality, Socialist Principles Explained.............................................................£2.00 x____
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ascribing independent reality to what you have in fact
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economy” (the subtitle of Capital), that the economic
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Dr Williams may also be aware that here Marx was
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applying to economics the theory that Ludwig Feuerbach
had applied to religion in his 1841 The Essence of Chris-
tianity. Feuerbach argued that, far from God making man All prices include postage and packing. For six or more
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according to Feuerbach, the Archbishop’s god was also
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The Archbishop was getting a dig at Marx in when he ADDRESS............................................................................................
said he said he was right about this “if about little else”.
But Marx once made a harsh comment about the Church ..............................................................................................................
of England, writing in the Preface to the first edition of ..............................................................................................................
Capital, that it would “more readily pardon an attack on
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Christians are not common, as touching the right, title,
and possession of the same, as certain Anabaptists do
falsely boast . . .” If he keeps on reading Marx maybe the
Archbishop might be prepared to abandon this one too.

Socialist Standard November 2008 9

November 08 BDH.indd 9 24/10/08 10:39:24

Crisis and Inflation:
Back to the Future?
Gordon Brown claimed that he had ended the boom and bust
cycle. The current economic crisis demonstrates that normal
service has been resumed.

t is one of the ironies of our times wage restraint means that the unions economic crisis breaks out is that poli-
that the election of ‘New Labour’ in are (understandably) grumbling. ticians, central bankers and pundits all
1997 was meant to have left ‘Old One of the interesting things about realise that perhaps the magic formula
Labour’ and everything connected capitalism is the way in which when didn’t work after all. The realisation in
with it behind. The popular perception the economy is booming an economic the 1970s that Keynesian economics
(first outside the Labour Party and consensus of sorts has a tendency to didn’t really work was a psychological
then inside it) was that Old Labour break out. The general support for and philosophical blow that some never
meant nationalisation, inflation, labour Keynesian economics that developed recovered from, and its replacement
unrest, and a host of other negative during the long boom of the 1950s and by something loosely called ‘��������
experiences that were associated 60s was famously labelled ‘Butskellism’ ism’ was never entirely accepted even
with life in the 1970s. Gordon Brown by the Economist after Tory Chancel- by those on the political right who had
was the New Labour ‘iron chancellor’ lor Rab Butler and his Labour shadow, been most well-disposed towards it.
who had left all this behind, created Hugh Gaitskell. In recent years there After a series of crises in the 1970s
a low inflation environment and has been a similar consensus of opin- was followed by the big recession of the
abolished boom and bust. ion even if the Labour and Tory parties early 1980s, and then the recession of
The current economic crisis has don’t like to admit it explicitly – it is the early 1990s, another long boom oc-
demonstrated that normal service has almost as if when the economy goes curred and with it the latest economic
been resumed. Unemployment is on the well they are afraid to do anything too consensus. There was little if any new
up (no Labour government has ever left different, lest they upset the magic thinking to underpin it – it was merely
office with unemployment lower than formula in the process. a pragmatic amalgam of vague aspects
when it was elected), the financial sec- of ‘monetarist’ practice with some
tor is in turmoil, price rises are at their Psychological blow left-over bits of Keynesian theory. For
highest level in years, and state sector What happens when an unexpected the politicians and economists, these

10 Socialist Standard November 2008

November 08 BDH.indd 10 24/10/08 10:39:24

had emerged by default because they been used as the main policy instru- ences price rises – which is that instead
were the bits of these two theories that ment for controlling inflation ever since, of interest rates influencing price rises
hadn’t been transparently discredited by the governments of Major, Blair and it is effectively the other way around.
to the satisfaction of all concerned by now Brown. This is despite the fact that Banks make their profits generally by
the preceding crises and recessions. as a policy it not only arose by default, lending money out at a higher rate than
There is no better example of this dubi- but has little to practically recommend they borrowed it at, being concerned
ous consensus than current thinking it. The theory is that when interest with the ‘real rate of interest’ after
on the (interlinked) issues of inflation rates rise, people borrow less and cut inflation is taken into account – and
and interest rates. their spending. But this only takes into rates tend to rise in order to protect
The persistent rises in the price level account one aspect of what happens. these banking margins (the contrary
that have occurred in the UK and most Interest rates are the price of borrowing idea of the ‘credit creationists’ that
of the developed world since the Second and lending money and when inter- banks make profits not by doing this
World War have exercised the minds of est rates rise, lenders are affected just but by effectively creating money out
politicians and economists in the de- as positively as borrowers are affected of nothing instead, should never have
cades since, and various explanations negatively. A movement in interest been taken seriously, and is in present
have been put forward to account for it: circumstances beyond risible).
wage increases above rises in produc-
tivity, excessive government spending, Stagflation
high government borrowing, the expan- The current rise in the RPI in the
sion of credit, and many others besides. UK coupled with the economic crisis
In the 1970s and 80s a highly conten- has led some economists to argue that
tious explanation for it was advanced capitalism is about to be gripped by
by Professor Milton Friedman and was the kind of ‘stagflation’ that existed in
adopted by the Thatcher government the 1970s, so called because economic
in the UK: the aforementioned ‘����
mon- stagnation coincided with rising prices.
etarism’. Loosely, this was the view With the credit crunch biting and the
that inflation is caused by an overly financial apparatus of capitalism in
rapid expansion of the money supply turmoil, unemployment is now on the
that increases monetary demand for rise and growth has come to a stand-
goods and services in the economy and still, at best.
pulls up prices. It was often linked or In the nineteenth century, when the
integrated with other views, such as Bust: the Wall Street Crash study of economics developed seriously
inflation being caused by government and Karl Marx developed his critique
borrowing (with government borrowing of it, persistent inflation (and therefore
and money supply expansion allegedly rates changes the terms of the relation- the possibility of stagflation) hadn’t
being correlated). ship between borrowers and lenders occurred at all after the Napoleonic
The problem for the Thatcher in an economy and can create a short War ended. Instead, prices generally
government’s monetarist anti-inflation term economic disturbance, but it does tended to rise during booms and then
strategy was that the main defini- not affect the level of purchasing power fall away during slumps when demand
tions of the money supply chosen for as a whole and can have no significant was lower, and price charts from this
the purposes of monitoring monetary and persistent effect on the price level period show the cyclical ebbs and
expansion were erroneously based on (for example, while those with mortgag- flows quite clearly, both in Britain and
bank deposits. And there was no reli- es and other loans are disadvantaged abroad. By the start of the First World
able way they knew of to control their by higher interest rates, those with sav- War in 1914, for instance, the overall
expansion and contraction anyway. ings, interest-bearing investments, etc price level was almost identical to what
Ironically for a Party concerned by gov- gain to a similar overall extent). it had been in 1850.
ernment borrowing levels, one method That raising interest rates cannot This general tendency for prices to
they resorted to was ‘overfunding’, halt inflation – or even slow its rate of rise during times of economic prosperi-
described by Thatcher as when ‘the growth – has been demonstrated by a ty and then fall back when there is eco-
Government sought to reduce private close look at economic history. Dur- nomic contraction is still evident today.
bank deposits . . . by selling greater ing the time when Thatcher was Prime However, it is disguised by something
amounts of public debt than were re- Minister the Minimum Lending Rate that only existed episodically before the
quired merely to finance its own deficit’ (as it was then called) for the banks Second World War, after which it has
(The Downing Street Years, p.695). rose from 9 per cent in 1988 to 15 per been a permanent feature – currency
When this and other anti-inflation- cent in 1989 yet the Retail Price Index inflation.
ary tactics didn’t work, the eventual (RPI) increased considerably across the Since the beginning of the war, the
method settled upon by Thatcher and entire period, having an average annual price level has risen every single year
her Chancellor Nigel Lawson was to rate of 4.1 per cent in 1987 that had and is well over 30 times its 1938 level.
use interest rates as a policy instru- become 9.5 per cent by 1990. The cause of this persistent rise in the
ment. In her memoirs, Thatcher stated If that was considered a ‘fluke’ it price level has been an excess issue of
that in her view ‘the only effective way has just been repeated, as the UK currency (specifically currency that is
to control inflation is by using inter- economy under Gordon Brown has just no longer convertible into an underlying
est rates to control the money supply’ experienced a similar situation. Base commodity like gold). This is because
(p.690) and this was one of the main rates reached a recent low of 3.5 per while interest rates and movements
reasons Thatcher and Lawson famously cent in mid 2003 and were progres- in wages and profits, etc change the
disagreed towards the end of her reign, sively raised to 5.75 per cent last year. distribution of purchasing power in the
because he began to use interest rates Yet throughout this time, the RPI has economy, they do not – of themselves
as a means of tracking the Deutsch- crept up from a recent historic low of – increase the total amount. An excess
mark in the European Exchange Rate well under 2 per cent in 2002 to around issue of notes and coins in circula-
Mechanism (ERM) instead. 5 per cent now, the highest it has been tion does precisely this if it is over and
since Thatcher left office in 1990. above the amount needed to carry on
Brown follows Thatcher These two examples reflect what re- production and trade.
It is notable that interest rates have ally happens when an economy experi- An over-issue of currency injects

Socialist Standard November 2008 11

November 08 BDH.indd 11 24/10/08 10:39:25

purchasing power into the economy What������������������������������
s happened over the last cou- matters worse (he cited, in particular,
which is not reflective of real wealth ple of years is that this low-cost goods the 1844 Bank Act which kept interest
generation; put simply, it is too much effect has started to lessen because of rates abnormally high). This is in some
money circulating given the level of the world economic boom that built up, respects the history of recent times too,
production of goods and services (and especially in commodities like oil, met- as after the credit crunch began last
the trade associated with buying and als, wheat, and so on. The persistent, summer base rates have been higher
selling them). Before this truth was lost ongoing currency inflation plus the than they might have been because of
in a fog of now discredited economic effects of this well-documented com- the view of governments and central
theories, inflation was routinely called modities ‘bull market’ have meant large bankers that high rates were needed to
‘currency inflation’, to reflect this. And price rises are once more a major policy stave off inflationary pressures.
on the occasions it occurred govern- During any slump, interest rates
ments could – and did – put a stop to tend to fall away from their peak
it, like when they withdrew the then reached at the end of the boom as the
significant sum of £66 million in notes demand for money capital eases, this
and coins from circulation in 1920, being one of the many conditions for
which led to a fall in the general price an eventual improvement in production
level of around 30 per cent, before the and trade, but on this occasion it has
return to the gold standard in 1925. been slow happening (especially given
the severity of the housing bust and the
Printing presses associated financial crisis). The irony
In 1938 there was £442 million in now is that such is the magnitude of
notes and coins outside of the Bank of this crisis, with a major bank filing for
England circulating in the UK economy. bankruptcy or being rescued almost
Economic growth since then has aver- literally every week (Bear Stearns,
aged around two and a half per cent a Lehman Brothers, Wachovia, Fortis,
year (typically going up more than this Bradford and Bingley, HBOS, the entire
in booms and down in slumps) yet the Icelandic banking system, etc) that
amount of notes and coins in circula- wherever central banks decide to pitch
tion has persistently increased far base rates, these are being effectively
beyond what has been needed for the Bust again: the Credit Crunch ignored by the banking system as a
purposes of production and trade. To- whole, where the key London Inter-
day, according to the Bank of England, concern (in the 1970s, when price rises Bank Offered Rate (‘Libor’) is still nearly
notes and coins in circulation stand took off and peaked at nearly 27 per two per cent above base rates with the
at £50,370 million, up from £47,800 cent in 1976, this again was a com- credit markets locked into a state of
million a year earlier, as the inflationary bination of the background effect of fear-driven paralysis.
process that started in the late 1930s currency inflation with a massive bull The severity of the current crisis,
has continued apace. This is why, un- market in commodities like oil). with big falls in demand in the economy
like in the nineteenth century when and increasing unemployment, may
slumps led to overall price declines, One club golfers well lead to pressure on retail prices
prices have risen every single year Here lies a big current problem for easing somewhat despite the govern-
since the war whether the economy has Gordon Brown and other world leaders, ment������������������������������������
s continuing recourse to the print-
been in boom or slump (because while and in some cases the central bankers ing presses. But whether this happens
slumps have put downward pressure to whom they have devolved respon- or not, there is a sense of real danger
on prices this has always been out- sibility. Unaware of the real cause of and panic in the market economy at the
weighed by the effects of the ongoing inflation, which has been lost in the moment as the lubrication that keeps
currency inflation). mists of time, they have reached a stage the capitalist machine running – the
It is true that for some years prices – more by default than design in some money markets – are dysfunctional.
rises in the UK and other countries respects – whereby they have only one So, with inflation concerns (and no
– while still positive and persistent – policy instrument to deal with inflation- clue how to handle them), the effects of
haven’t been at quite the levels seen ary pressures (raising interest rates) a recent oil price spike, stock market
in the 1970s, 80s and early 90s. The and one main policy instrument to deal crashes, soaring unemployment, the
main reason for this appears to have with a declining economy drowning in most significant financial crisis in most
been the entry into the world market of debt (lowering interest rates). When people’s lifetimes, and the return of
vast amounts of low cost goods pro- asked to deal with the two problems nationalisation as a means of propping-
duced by the massive emerging market simultaneously, they have only confu- up failing businesses, it is certainly a
economies of the Far East, including sion, as the two solutions they would case of ‘back to the future’ for Britain’s
China. As rising productivity lowers have proposed are mutually exclusive Labour government.
the amount of labour time necessary of one another. Most market commentators don’t
to produce goods, this phenomenon is In reality, such have been the know whether the most appropriate
to be expected, and its scale in recent problems on the money markets and comparison is with the 1930s slump
years has been colossal with massive the declines in the stock markets in after the Wall Street Crash or the 1973-
price falls in clothing and leisure goods recent weeks – and such is the evidence 4 UK secondary banking crisis and
like electricals according to the Office that the credit crunch is now having a bear market which followed the ‘Barber
for National Statistics (prices of many significant effect on the real economy Boom���������������������������������
and housing bubble. While capi-
goods have fallen by between a quarter – they have belatedly decided to lower talism never repeats its history precise-
and a half in the last 10 years). Without central bank base rates as the lesser of ly, it may be an especially severe dose
this effect, overall rises in the basket of the two evils. of the latter rather than the former ...
goods that comprise the RPI measure- What is germane to this is that in nevertheless, given the general panic
ment would have been higher still, as the nineteenth century, Marx wrote and helplessness of recent weeks, you
has been evidenced by the continuing that while the market economy��������
s peri- wouldn’t want to bet your Collateralised
big price increases of goods not directly odic crises and convulsions cannot be Debt Obligations on it.
affected by this phenomenon, such as eradicated through government policy, DAP
fares, catering and leisure services. there are occasions when it can make

12 Socialist Standard November 2008

November 08 BDH.indd 12 24/10/08 10:39:25

The end of “neoliberalism”?
What the critics of “neoliberalism” want is a “regulated capitalism”, but they are not the only ones.

et us”, President Sarkozy of France told the UN on – to an employer for a wage or a salary. Labour-power has
23 September, “rebuild together a regulated capi- the unique property of being able to produce a greater
talism in which whole swathes of financial activity value than its own, but the employers have to pay only the
are not left to the sole judgment of market operators, in value of the labour-power not the total value it produces.
which banks do their job, which is to finance economic Marx called the value which workers produced over and
development rather than engage in speculation.” above their wages, and which went to the employer, “sur-
This would normally be regarded as a position taken up plus value”.
by leftwing critics of what they call “neoliberalism”. Thus Capitalism is this economic mechanism of the extrac-
Green Party MEP Caroline Lucas, when asked for her views tion of surplus value from the wage-labour of the produc-
on the global financial crisis by the Guardian (17 Septem- ing class and of the accumulation of most of it as new capi-
ber), answered that tal. Marx called it
“we are going to have “the self-expansion
to return finance to of value”. Capital-
its role as servant ism is an economic
rather than master of mechanism rather
the global economy”. than a form of
Neoliberalism property ownership,
is not a word that a mechanism which
Sarkozy would use. is in fact compat-
In fact, when he was ible with various
elected President different forms of
in May last year he ownership. Wher-
was widely seen as ever there is the
France’s equivalent exploitation of wage-
of Mrs Thatcher. But labour for surplus
then “regulated capi- value, there there is
talism” is not how capitalism. Which
Greens and the other is why the ex-USSR
critics of free-market Sarkozy, Marx where there was
capitalism would state property and
describe what they stand for either. a strongly regulated
Neoliberalism is a term coined by opponents of the market was still (state) capitalist.
policies pursued by many governments since the 1980s of In any event free market capitalism without any state
privatisation and deregulation, of allowing market forces to regulation has only ever existed on paper. Capitalism and
operate with less state interference. “Neo” because it was the state are not opposites or incompatibles. They have al-
seen as a revival of the anti-state, laissez-faire philosophy ways co-existed and in fact capitalism could not have come
of 19th century liberalism. As supporters of these policies into existence or survived without the support of the state.
often call them simply “capitalism”, some opponents also It was the state that helped dispossess peasants of their
presented themselves as “anti-capitalist”. land so that they became factory fodder for the capitalist
But this is a false distinction. Capitalism is not just pri- factory owners. It is the state that creates and enforces
vate enterprise, free market capitalism. That is just one of private property rights, without which the capitalist class
the forms it has taken historically. To see this as the only would not be able to monopolise the means of production
form of capitalism, and therefore to use the term “capital- and extract surplus value from the wage-labour of their
ism” to refer to it only, is to ignore two important experi- employees. The predominant form of capitalist enterprise
ences of the last century: the nationalisation measures – the limited liability company – is in fact entirely the
carried out by Labour and Social Democrat (and other) creation of the state. The state has to issue the currency
governments, and of course what existed in the ex-USSR and set up bodies to interpret and enforce commercial con-
and its satellites. Capitalism, in other words, can also take tracts. It has to maintain armed forces, both to keep law
the form of state capitalism. and order internally and to protect and further the inter-
The essence of capitalism is not any form of owner- ests of the capitalist class abroad. It has to set up bodies to
ship – whether legal property rights vested in individuals or make laws and regulations at national and local level and
companies, or state property from which bondholders draw other bodies to apply, police and enforce them. All these
a legalised income, or state property where a bureaucratic activities essential to the functioning of capitalism have to
elite exercises a de facto control of it. Capitalism is indeed be paid for. So the state has to levy taxes.
based on the exercise of a monopoly over the means of There is, then, no such thing as capitalism without the
production by a minority, but so have other class societ- state. That said, there are still degrees of state regulation
ies such as ancient slave society, feudalism and oriental at different times and in different countries. The state is
despotism. supposed to represent the general capitalist interest, but
What distinguishes capitalism from them is the way in practice is subject to all sorts of lobbying and pressures
in which the producing class is exploited – via the wages from special interest groups who want it to make laws and
system. Denied free access to the means of production, regulations in their interest, to which it often gives in.
the vast majority of the population are forced to sell their From time to time, however, the state does genu-
working abilities – what Marx called their “labour power” continued on page 22

Socialist Standard November 2008 13

November 08 BDH.indd 13 24/10/08 10:39:25

Good Cap, Bad Cap
The credit crisis has tarnished the image of capitalism but its defenders may help it live on by
pinning all of the blame on financiers.

nvestment bankers have gone in the past few months sary to explain how this false ideology has a basis in reality
from being the “masters of the universe” to the ob- that makes it seem plausible to many. That basis, as just
ject of universal scorn. Across the political spectrum touched on, is the antagonism that actually exists between
in the United States, particularly at the fraying ends different types of capitalists with regard to how surplus-
of its two main political parties, criticism of Wall Street value is divided between them. This fosters the notion that
can be heard. Even McCain and Obama – whose presi- fundamental differences exist between capitalists and that
dential campaigns have been generously funded by Wall some are more deserving of their revenue – an impression
Street – have had to make half-hearted statements that is further deepened by the fact that revenue takes
about how “greed is, um, bad.” different forms that appear to be
This criticism is richly deserved, independent of each other.
of course, but many of the harsh- This means that we can better
est critics of speculators are fond of understand why money capitalists
capitalism itself and take a rather and industrial capitalists tend to
benevolent view towards other types be viewed differently by examining
of capitalists. Greedy bankers and the division of surplus-value be-
stockbrokers are lambasted, but tween them and the specific forms
in the next breath the capitalists of their revenue. Marx does this
involved in the actual production and in Volume 3 of Capital, where he
sale of commodities are portrayed as examines “interest” and “profit of
unfortunate victims of the credit cri- “enterprise” – the former being the
sis. This one-sided criticism suits the revenue that the money capital-
capitalist class as a whole just fine. ist is entitled for loaning capital to
Now that capitalists themselves the industrial capitalist, while the
are at least exposing some of the high latter is the profit the industrial
crimes and low comedy connected to capitalist receives after paying that
their own financial system, and so interest to the money-capitalist.
much popular attention is focused on Marx’s discussion of “interest”
the role of money capitalists, it seems and “profit of enterprise” is not
particularly necessary for us to attack directly related to the economic
the false notion that there are “good” and “bad” capitalists; activities of the now-disgraced stockbrokers, as they have
and that crisis could be avoided and capitalism perfected if made money in more imaginative ways than simply earn-
the bad ones could be kept under control or swept away. ing interest, yet his observations reveal why it is so easy
for bankers to be cast in the role of villains, while those
Den of thieves capitalists owning actual means of production appear in a
This idea that bankers – particularly investment bank- more favourable light.
ers – are any worse than other types of capitalists is not
convincing to anyone aware that the revenue of all capital- Magical money
ists flows from same source: the exploitation of labour. The We can begin by looking at interest – or “interest-
dirty little secret of capitalism is that the capitalist class bearing capital,” to be more exact. The loaning of money
as a whole, and all of the individual capitalists, enrich to function as capital is the first step in the overall circuit
themselves thanks to workers adding more new value to of capital, M–C– M´; and that money (M) is then used to
the commodities they produce than the value of the wages purchase the labour-power and materials of production
received as payment for their labour-power. needed to produce commodities (C), which embody more
Any party to this exploitation of labour – whether the value than the value of those inputs, making it possible
capitalist who advances the investment funds, the capital- to sell them for a greater sum of money (M´) than initially
ist who supervises the commodity production process, or invested. Part of this surplus in value generated through
the capitalist who is tasked with selling the commodities production is paid to the money capitalist in the form of
– is entitled to a piece of the action and merits an equal interest.
share of the blame. It is nonsense to argue that one type of With the form of “interest-bearing capital,” however,
capitalist is more or less culpable than the others. we only the two extremes of the circuit above, or: M–M´. In
The relations between capitalists are very much like other words, nothing more than the money capitalist loan-
those between a group of thieves, who cooperate to pull off ing out money that returns eventually in a greater amount.
a heist and then divide the loot among themselves. Con- Money seems to have the magical power to breed more
flicts easily arise from such an arrangement: as a bigger money. Overlooked is the intervening process of produc-
share for one means a smaller share for the others. Such tion, which is the actual source of the interest earned.
squabbles, however, are of little concern to the person who As long as interest successfully flows back to the money
has been robbed. Likewise, for workers, divisions within capitalist, whatever happens between M and M´ is a mat-
the capitalist class should be of secondary interest to the ter of indifference. It thus appears at first glance – to this
more fundamental conflict between the exploiters and the capitalist and others – that profits can emerge regardless of
exploited. production.
Yet we need to do more than simply prove that the idea This illusion is reinforced by the fact that individual
of “good” and “bad” capitalists is wrong: it is also neces- money owners can indeed loan money for non-productive

14 Socialist Standard November 2008

November 08 BDH.indd 14 24/10/08 10:39:26

uses. Everyone knows, for instance, that credit card combine their labour – there is no need for the menacing
companies make huge profits by charging ordinary “con- supervisor. Under capitalism, however, there is a blurring
sumers” usurious interest rates. Yet that freedom to direct of the two functions, so that it seems as if capitalists (or
money towards non-productive sectors, or to engage in whoever is hired by them to supervise workers) are per-
speculation on fictitious forms of capital, only holds true forming a necessary function that is intrinsic to the labour
for individual capitalists. If a large portion of the industrial process itself.
capitalists were to withdraw from production, so as to be- The fact that industrial capitalists play an active role in
come money capitalists, the ultimate source of profit would the production process, however reactionary it may be in
quickly dry up and the rate of interest would plummet. fact, provides a basis for the claim that they are preferable
Nevertheless, if we view the capitalist world from the to the money capitalists who do nothing more than pro-
perspective of the individual interest-bearing capital, it vide the investment. Yet even in the case of the industrial
seems that profits can materialize out of thin air, without capitalists, who are disguised as wage-workers, the labour
actual production. Marx thus calls interest-bearing capital process is simply a means to an end. It is only because
the “most superficial and fetishized form” of the capi- that process is the direct source of their profits that indus-
tal relationship, where capital “appears as a mysterious trial capitalists take such a keen interest in it.
and self-creating source of interest, of its own increase.”
Instead of appearing to be one part of the total surplus- The real task
value, interest seems to arise from an inherent property of Strange things occur when surplus-value is divided up
capital itself, so that any owner of it is entitled to interest. among different types of capitalists, taking the form of dif-
With interest, we are one step removed from the actual ferent types of revenue. It seems that each form exists in-
process of production; and from the exploitation of labour dependently and has a separate origin – with none of them
that occurs within that process. This fact is at the root of traceable to the exploitation of labour. With this quantita-
the tendency for people to view tive division of surplus-value,
money capitalists – and for as Marx notes, “it is forgotten
them to view themselves – as that both [interest and profit
inhabiting in a rarefied world “If workers end up concentrating of enterprise] are simply
where it is not necessary to get
one’s hands dirty. The money
on the antagonisms between parts of surplus-value and
that such a division can in
capitalists who engage in this capitalists, it becomes harder to no way change its nature, its
mysterious process, whereby origin, and its conditions of
money is able to breed more see the conflict between wage- existence.”
money, both dazzle and disgust
those who must earn a living in
labour and capital” The theory of surplus-
value brings to light the
more pedestrian ways. connections that actually
exist between capitalists, by
Capitalist workers? revealing the ultimate source
If the interest that the money capitalists earns seems to of capitalist wealth, but that theory itself can be hard to
spring out of thin air, the industrial capitalists, in con- grasp precisely because of the existence of those different
trast, seem to earn their profits from the sweat of their revenue forms. Once we take those forms as fixed premis-
brow. Their “profit of enterprise” – which is what remains es, without considering their origin, it seems natural to
after they pay money capitalists interest – appears to be judge some capitalists more harshly or kindly than others.
the fruit of functioning capital, rather than the fruit of If workers end up concentrating narrowly on the an-
owning capital. Just as there is an abstraction from the tagonisms between capitalists, it becomes harder to see
actual production (= exploitation) process in the case of the more fundamental conflict between wage-labour and
interest-bearing capital, in the case of profit of enterprise capital; and harder to see the real solution to the problems
the production process is separated from capital itself, so faced. Here we have the old “divide and conquer” approach
that it appears merely to be labour process. Profit seems with a new twist: instead of dividing the working class, the
to accrue to industrial capitalists as payment for a useful internal divisions of the capitalist class are emphasized to
function performed in that labour process. deflect attention from the class divide.
There is in fact an important role played by the indus- The criticism of Wall Street today that is being voiced
trial capitalist, and that is to ensure that the production by defenders of capitalism is one example of that divide-
process is carried out in a manner that facilitates the and-confuse method in action. The current crisis is framed
greatest extraction of surplus-value from workers. Not in terms of “Wall Street vs. Main Street” or “the financial
exactly a noble calling, but exceedingly necessary under world vs. the real economy” – never as a manifestation
the class-divided capitalist system. The profit of the indus- of the contradictions of class-divided capitalism. With
trial capitalist thus seems to be a “wage” received for this so many criticizing the financial world, while singing the
supervision of labour. It appears, as Marx wittily put it, praises of good old commodity production and the capital-
that the “labour of exploiting and the labour exploited are ists in charge of it, we need to remind ourselves that the
identical, both being labour.” If the former receives far bet- production process under capitalism is a process of labour
ter wages for that labour, it is said to be compensation for exploitation, a means of generating profits for capitalists.
its more “complex” character. The task for socialists is not to drive out speculators
This false impression that the industrial capitalist is a from capitalism, so as to somehow perfect the system,
sort of worker seems plausible because the act of supervi- but to move beyond a world where production is merely
sion, necessary in any class-divided society, is confused a means of capital accumulation. So yes – by all means
with the coordination function necessary when numerous – let’s chomp down hard on the middle finger Wall Street
workers engage in production together. We need to distin- has been pointing at us all these years, but we should also
guish between the supervision needed to extract surplus- keep an eye on the hand that robs workers every day on
value from wage-slaves, and the coordination necessary in the job.
the case of combined or social labour. In the latter case, M. SCHAUETRE
the workers themselves can quite easily work things out
for themselves and determine the most appropriate way to

Socialist Standard November 2008 15

November 08 BDH.indd 15 24/10/08 10:39:26

Even 90 years after the Russian revolution there are still some who claim that the event shines as
a beacon for socialism. We were able to say at the time that whatever was happening in Russia it
was not a socialist revolution.

A representation of
the seizure of the
Winter Palace

The Russian Revolution recalled

n August 1918 the Socialist Standard pointed out that, not exist in Russia in 1917, so why have the events been
while there were industrial towns in Russia, the coun- claimed as socialist?
try was largely agricultural with about 80 per cent of
the population still living on the land. The answer to the Russia in 1917
question whether “this huge mass of people” (about 160 The country had suffered huge losses during the war
million), which indeed included some industrial and ag- against the more heavily industrialised Germany, the econ-
ricultural wage slaves, was “convinced of the necessity omy was in a mess and there were food riots. The Tsar had
and equipped with the knowledge requisite for the social been forced to abdicate in March 1917 – while both Lenin
ownership of the means of life?” was “No!”; beyond the and Trotsky were out of the country – and the situation
fact that the leaders in the November movement claimed was confused. There was a provisional government which
to be Marxian socialists there was no justification for included capitalist and landowning representatives. In July
terming the upheaval in Russia a Socialist Revolution. Kerensky became leader with support from the Committee
Our analysis of the situation was based upon Marx’s of the Duma (the Russian parliament) but with increasing
definition of capitalism as a relation of wage-labour and support from the councils of Workers and Soldiers – the
capital and on the conditions necessary for that relation Soviets. However he continued with the war despite its
to be ended and replaced by socialism. Before “the Com- unpopularity.
munistic abolition of buying and selling, of the bourgeois There was widespread discontent with soldiers, work-
conditions of production”, as the Communist Manifesto put ers and peasants reacting against the adverse conditions,
it, can happen, there must be a sufficient development of which the Bolsheviks were able to take advantage of the
the productive forces, and the class which has to sell its discontent. They gained control of the Soviets using slo-
labour power in order to live – the working class – must gans like “All power to the Soviets”, and crucially “Peace!
fully understand what is involved and be ready to take the Bread! Land!” In other words, this was what the war-
necessary political action. weary, hungry workers and peasants wanted – they were
The conditions envisaged by Marx to be necessary for not after socialism. That there was not a majority ready for
the ending of capitalism and establishing socialism did socialism would not have concerned Lenin. The situation

16 Socialist Standard November 2008

November 08 BDH.indd 16 24/10/08 10:39:27

fitted his vanguard theory that the working class by its cipline workers in order to increase production, illustrates
own efforts is only able to develop trade union conscious- the absence of the absolute pre-requisite for socialism –
ness and needs to be led by professional revolutionaries. the conscious participation of the majority of the working
There were enormous difficulties including the backward class.
state of the country and the civil war; also the expected
uprisings in other European countries did not take place. State capitalism
The development of capitalism was all that could happen In 1921 the Bolshevik government adopted a New
and the Bolsheviks as the new rulers would have no choice Economic Policy. In proposing it Lenin argued that per-
but to do their best to aid it. mitting some private industry and allowing peasants to
That it was a minority revolution is illustrated by the keep surpluses were not dangerous for socialism. “On the
way in which Lenin dealt with the political situation. The contrary, the development of capitalism under the control
All-Russia Soviet Congress had met in November 1917 and and regulation of the proletarian state (in other words
had passed resolutions in favour of peace, ending land- ‘state’ capitalism of this peculiar kind) is advantageous and
owners’ rights to possession of the land, and the setting up necessary in an extremely ruined and backward peasant
of a ‘workers and peasants’ government, headed by Lenin smallholder country…in so far as it is capable of immedi-
and dominated by the Bolsheviks, pending the election of a ately improving the state of peasant agriculture.”
democratic ‘constituent assembly’. Our criticism of Lenin, Trotsky and the Bolsheviks is
However when the Constituent Assembly was elected not that they did not achieve what was not possible at the
the Bolsheviks did not have a majority and it was dis- time, i.e. socialism. It is rather that they adjusted theory
solved. Trotsky’s excuses for this are instructive – the elec- to suit the circumstances: seeing the necessity for capital-
tion had taken place too soon after ist development they claimed that
“the October Revolution” and news state-monopoly capitalism was
of what had taken place spread “The peasant masses had socialism. In Can The Bolsheviks
only slowly. “The peasant masses
in many places had little notion
little notion of what went on retain State Power? Lenin wrote
about the “big banks” as the
of what went on in Petrograd and in Petrograd and Moscow. “state apparatus” needed to bring
Moscow. They voted for ‘land and about socialism. “A single state
freedom’”. Precisely, for that, not They voted for ‘land and bank…will constitute as much as
socialism. So, not only did the
Bolshevik takeover not have major-
freedom’, not socialism.” nine-tenths of the socialist ap-
ity support, majority support for It was also Lenin who said
socialism not present either. in The State and Revolution in
By the middle of 1918 the Communist Party (as the August 1917 that the first phase of communism was usu-
Bolsheviks were now called) had firmly established its ally called socialism, when Marx made no such distinction
dictatorship and freedom of the press and assembly were between the terms. (In the 1888 Preface Engels refers to
restricted. The All-Russia Soviet Congress had ostensibly the Communist Manifesto as the most international of all
taken all power to itself but this was a façade. The Con- Socialist literature). In Marx’s conception of the first phase
gress elected the 200 members of the Central Executive of communism there was still common ownership, an end
Committee but the credentials of delegates to the Congress to buying and selling, and no money. (Marx mentions the
were verified by Communist Party officials. Lenin claimed possibility of labour time vouchers despite their obvious
that what he called “Soviet Socialist Democracy” was “in drawbacks). What happened in Russia did not qualify even
no way inconsistent with the rule and dictatorship of one as a “first phase of communism”.
person; that the will of the class is at times best served by Contemporary Trotskyists still call their aim of state
a dictator” and this was approved by the Central Execu- capitalism socialism. The former Militant Tendency (now
tive Committee in 1918 (Martov The State and the Socialist called SPEW) think that nationalising 150 big corpora-
Revolution, p.31). tions would express in today’s language the demand in the
Communist Manifesto for the “abolition of private property”.
Labour discipline They also support Lenin’s vanguard theory that a revolu-
Raising the productivity of labour was a priority. In an tionary minority can by their leadership turn protest move-
address before the Soviets in April 1918 (The Soviets at ments into a ‘socialist’ revolution. So it is hardly surprising
Work) Lenin declared that not only was it necessary to halt that they claim the events in Russia in 1917 to have been
‘the offensive against capitalism’, they also had to em- a socialist revolution, blaming the backward state of the
ploy capitalist methods which included strict discipline at country, civil war and Stalin for what went wrong.
work. They should immediately introduce piece work and Both Lenin and Trotsky thought that democracy was
measures which “combine the refined cruelty of bourgeois not appropriate to their situation. Having taken power in a
exploitation and valuable attainments in determining cor- minority revolution they had to rule by force. This included
rect methods of work.” The previously stated aim of equal the use of secret police – the Cheka. Trotskyists excuse
wages for all was abandoned and a “very high remunera- Lenin’s red terror on the grounds that it was the outcome
tion for the services of the biggest of the bourgeois special- of civil war necessity, likewise with the measures taken
ists” was agreed. State control was seen as the “means to to deal with the problems of production. However, it was
establish the control and order formerly achieved by the precisely the conditions and the absence of a majority for
propertied classes” and he chided those who considered socialism that made capitalism the inevitable outcome.
the “introduction of discipline into the ranks of the workers The rule of Lenin supported by Trotsky paved the way
a backward step”. for Stalin. The legacy of the Russian Revolution, of Lenin
In January 1920 the Bolshevik government abolished and Trotsky, is that socialism/communism has come to be
the power of workers’ control in factories and installed identified with state capitalism. It was not a victory for the
officials who were instructed by Moscow and given control- working class, but a tragedy since it brought socialism into
ling influence. Democratic forms in the army had also been disrepute and diverted attention away from the vital need
abolished. to reject capitalism in whatever form.
The need to use capitalist methods to control and dis- PAT DEUTZ

Socialist Standard November 2008 17

November 08 BDH.indd 17 24/10/08 10:39:27

Socialists and the First World War
This month marks the 90th anniversary of the end of WWI. We
recall the socialist opposition to it.

he historian George Haupt has wherein their masters may dispose of M. Fox (an early member of the Party)
written that in July 1914 the the wealth they have stolen from them recalls the almost mesmeric effect of
workers movement did not con- (the workers), but in the struggle to one Socialist Party member, a man
sider war a possibility. Speaking six end the system under which they are called Anderson, who could project his
years later the German Social Demo- robbed....The Socialist Party of Great voice above the noise of a brass band
crat Karl Kautsky admitted that: Britain...declaring that no interests hired by local shopkeepers to drown
“It is surprising that none of those are at stake justifying the shedding of him out. (R. M. Fox: Smoky Crusade.
present at the meeting thought of a single drop of working class blood, London. 1938.)
raising the question of what to do if enters its emphatic protest against But even the most redoubtable
war broke out...or which attitude the the brutal and bloody butchery of our speaker could not withstand the
socialist parties should adopt in this brothers in this and other lands... onslaught of a crowd whipped into
war” (cited in Georges Haupt: Social- fever pitch by jingoistic propaganda.
ism and the Great War: the Collapse There survives in the Party archive a
of the Second International. Oxford, bound minute book recording out-
1972. p. 220.]) door meetings held in North London.
Haupt comments that it is impos- It records in a neat italic hand each
sible to say whether the leaders of the meeting held by the branch giving
International were “captives of their details of date, time and speaker and
own myths or whether their reaction chairman. Also recorded are the size
was the classical manifestation of of audience and occasional comments
that characteristic trait of the Sec- as to the kind of questions asked and
ond International: Reformist practice Labour leaders: Keir Hardie... the temper of the audience. Audience
screened behind verbal radicalism.” size seems to have fluctuated between
(ibid. p. 221.) Ramsay Macdonald... 100 and 250. The meetings in August
The parties of the Social Democrat 1914 increased in size and the entry
Second International shared our view “Many questions mainly about the
that capitalism causes war and, like war. Good meeting” occurs a number
us, called for the international solidar- of times. On Sunday August 30th a
ity of the working class but when war member named Wray addressed an
broke out in August 1914 this proved audience this time of around 800:
to be mere talk. “Many questions mainly about the
To their disgust, but not to their war...Hostility shown by the audience
surprise, the members of the Socialist so soon as the speaker began to reply
Party saw workers and their lead- to the opposition and the police closed
ers line up behind their respective the meeting leaving Party members to
governments ready to take part in get away with the platform amongst
... and George Lansbury
the slaughter. Labour leaders such as the hostile audience that had closed
Keir Hardie, Ramsay Macdonald and around it and damaged it one side of
George Lansbury assured the gov- the steps torn away and lost thus ren-
ernment that “the head office of the dering the platform useless for further
Party, its entire machinery, are to be propaganda meetings.”
placed at the disposal of the Govern- A later entry for September 20th
ment in their recruiting campaign.” records:
(Labour Leader 3 September 1914) “Opposition by Grainger of Daily
The British Socialist Party (succes- Herald League [sympathetic to the
sor to the SDF) war manifesto de- Labour Party] supported by several
clared that it recognised: members of B.S.P. [British Socialist
“…that the national freedom and Having no quarrel with the work- Party] in the audience with design of
independence of this country are ing class of any country, we extend raising prejudice against the SPGB
threatened by Prussian militarism and to our fellow workers of all lands the and so of breaking up the meeting.”
that the Party naturally desires to see expression of our good will and Social- On a Sunday in mid September
the prosecution of the war to a speedy ist fraternity, and pledge ourselves to one Hyde Park meeting was the sub-
and successful issue.” (Justice 17 Sep- work for the overthrow of capitalism ject of a concerted attack. The organ-
tember 1914 cited in H. W. Lee and E. and the triumph of Socialism.” (‘The iser of the meeting reported
Archbold Social-Democracy in Britain: war and the Socialist position.’ Social- “...There was a determined attack
Fifty Years of the Socialist Movement. ist Standard , September 1914) made to smash up the meeting. Just
London, 1935. p.225.) In common with most political as Elliot was closing the meeting the
The Socialist Party on the other parties the Socialist Party carried on police intervened and told him to close
hand denounced the war as none of a vigorous programme of in-door and down. As he did not close down as
the workers business. It was a war of out-door meetings. From street cor- quick as they wished they arrested
capitalist interests, ners and open spaces Party speakers him. Elliott was however, charged
“ ...the workers’ interests are not on platforms propounded the socialist with insulting the British armies and
bound up in the struggle for markets case against war. In his memoirs R. fined 30/-. The crowd numbered over

18 Socialist Standard November 2008

November 08 BDH.indd 18 24/10/08 10:39:27

a thousand and the organised opposi- had informed him that there were Socialist Party to put an end to the
tion attempted at the conclusion of eight plain clothes men present for the fruitless sacrifices of their spokesmen
the meeting to smash [the] platform purpose of arresting the Speaker and by stopping outdoor propaganda.”
but only succeeded in doing a little the Chairman as soon as the meeting (‘A Year of War.’ Socialist Standard,
damage to it.” started. It would appear that some August 1915.)
At a meeting held on 11 October anti war meetings were having some A further consideration was the
the speaker replied to questions about effect and it is likely that the Party’s issue by the Government of stringent
the war but “On the speaker replying informant had listened to the speak- Defence of the Realm Regulations
to the opposition the audience started ers over a period of time, and was at outlawing the uttering of statements
the National Anthem and the raising least unwilling to see our views sup- likely to cause disaffection. The deci-
of cheers” and the meeting had to be pressed. sion appears to have been a difficult
abandoned. It says a great deal for the But speakers did not have to op- one as the minutes record that it was
character, optimism, and bravery of pose the war from the platform to taken after a discussion lasting about
these early members that they could get into trouble. A member named two hours. The Party at a special
face hostile audiences week after Baggett reported that he had been meeting held to discuss the situation
week. Undeterred the branch repaired arrested and bound over in the surety ratified the decision. There was clearly
the platform and were by the end of of £50 to keep off the platform for six a small number within the Party op-
the week again holding meetings. months. The reason being that he posed to this course of action and
Some branches reacted to the had read out an British Army circular willing to “tough it out” but a motion
threat of physical attack by banding issued by Lord Roberts regarding the approving of the Executive Committee
together to continue open air meetings supply of prostitutes to the British decision was carried by a substantial
sometimes at new venues. In West Army in India. majority.
Ham three branches got together to In view of increasing hostility, and Explaining that “...our object was
hold a meeting in Stratford Grove, an the fact that a number of branches not to bid defiance to a world gone
area not previously covered by the had ceased to hold meetings on ac- mad, but to place the fact that in this
Party and its limited resources. It was count of the difficult situation, the country the Socialist position was
possibly chosen to avoid maraud- Executive Committee had to consider faithfully maintained by the Social-
ing gangs of jingoists who were well the suspension of outdoor political ists.” (Socialist Standard, January
aware of all the regular meeting places activity. Every effort had been made to 1915.) The Party continued as best it
where anti-war sentiments might find maintain outdoor meetings but had to could, male members, under tremen-
expression. recognise the dous social and economic pressures,
Other branches had better luck. “...brutality of crowds made drunk took what measures they could to
The secretary of East London branch with patriotism. The prohibitions avoid being called up. Those not so
reported that they had abandoned by the authorities, and the series of lucky ended up in Dartmoor prison.
a meeting at Victoria Park after an police prosecutions of our speakers, GWYNN THOMAS
obviously sympathetic Park Keeper compelled the rank and file of the

M - C - M’ originally had, or M - C- M’:

“More money is withdrawn from circulation at the finish than was
thrown into it at the start. The cotton that was bought for £100 is
The person who wrote the editorial in the perhaps resold for £100 + £10 or £110. The exact form of this process
Times of 17 September must have had their is therefore M-C-M’, where M’ = M + ⌂M = the original sum advanced,
dictionary of quotations handy. At the end of plus an increment. This increment or excess over the original value I
the editorial, entitled “Crisis and Capitalism” call ‘surplus-value.’ The value originally advanced, therefore, not only
and which argued that “the Lehman collapse remains intact while in circulation, but adds to itself a surplus-value or
Cooking shows, paradoxically, that the mechanisms expands itself. It is this movement that converts it into capital.”
the of the market are working. What is not
needed now is government intervention”,
Marx commented in a passage the Times could have quoted more
Books 2 they tagged on a quote from Marx:
Capital is money, capital is commodi-
“As the conscious representative of this movement, the possessor
of money becomes a capitalist. His person, or rather his pocket, is the
ties . . . By virtue of it being value, it has point from which the money starts and to which it returns. The expan-
acquired the occult ability to add value to itself. It brings forth living sion of value, which is the objective basis or main-spring of the circula-
offspring, or, at least, lays golden eggs”. tion M-C-M, becomes his subjective aim, and it is only in so far as the
The relevance of this quote is not clear but the editorialist seems appropriation of ever more and more wealth in the abstract becomes
to see it as a justification for leaving the capitalists – described as the sole motive of his operations, that he functions as a capitalist,
rational actors in the marketplace����������������������������������
alone in case they stop creat- that is, as capital personified and endowed with consciousness and
ing new value, stop laying golden eggs. Marx of course never held a will. Use-values must therefore never be looked upon as the real
that it was capitalists who create new value. He identified the source aim of the capitalist, neither must the profit on any single transaction.
of capital’s “occult ability” to increase itself as the exploitation of the The restless never-ending process of profit-making alone is what he
unpaid labour of the workers capitalists employed. It was their labour aims at. This boundless greed after riches, this passionate chase after
that added value to the original money capital. They were the ones exchange-value, is common to the capitalist and the miser; but while
that laid the golden eggs. the miser is merely a capitalist gone mad, the capitalist is a rational
The quotation is taken from Chapter IV of Volume I of Capital miser. The never-ending augmentation of exchange-value, which the
on ����������������������������������������������������������������
The General Formula of Capital���������������������������������
. The formula for the simple ex- miser strives after, by seeking to save his money from circulation, is
change of commodities, Marx explained, is C - M - C. A person starts attained by the more acute capitalist, by constantly throwing it afresh
with a particular commodity (C), sells it, i.e. converts it into money (M), into circulation.”
which they then use to buy a different commodity, some use-value So, the capitalist – or whoever personifies capital, these days, the
they need. In other words, they sell in order to buy. top executives of capitalist firms – is more a “rational miser” rather
Under capitalism, Marx went on, the aim is rather to buy in order than a “rational actor in the marketplace” (who, presumably, would go
to sell, M - C - M, but this is pretty pointless if you are just going to end for C - M - C). Not that “the appropriation of more and more wealth
up with the same amount of money as you started with. So, in fact, in the abstract” can be described as rational. Doubly irrational is the
the aim under capitalism is not just to buy in order to sell, but to buy behaviour of finance traders who think that golden eggs can be laid
in order to sell at a higher price, to end up with more money than you independently of the “occult” activity of production.

Socialist Standard November 2008 19

November 08 BDH.indd 19 24/10/08 10:39:28

Book Reviews

Socialist Party What revolution? 1989 of “actually existing commu-

nisms” without irony and asserts that
the former Soviet Union succumbed
Merchandise The Communist Manifesto, by
to “capitalist counter-revolution”.
But there is nothing in the Manifesto
Karl Marx and Friedrich Engels.
Teeshirts: which would warrant such claims.
Introduction by David Harvey, Pluto
Blue with polar bear and ‘If you The Soviet Union and similar regimes
Press, 2008. £7.99.
were a polar bear, you’d be a did not institute the abolition of buy-
socialist’ plus party website address. ing and selling and are best character-
Yellow, with blue and green globe ised as state capitalist dictatorships
The pub-
‘The world is a treasury for all’ over the proletariat. Harvey has an
lisher’s blurb
plus party web site address on. online course “Reading Marx’s Capi-
on the back
Sizes: Small, Medium, Large, Extra tal” (, but
says: “This
Large. in this Introduction he alleges that
book truly
  crises can be brought about through
Mugs: underconsumption (lack of effective
the world,
One style: demand), an economics theory which
‘Duet’ - Red Marx emphatically rejected. Harvey’s
millions to
and white Introduction is very disappointing, but
with ‘Only the Manifesto itself is still an inspiring
sheep need read.
nately, this
leaders’ LEW
is not true:
(pictured) this book has not changed the world,
and nor has it inspired millions to revolu-
website on, tion. The Manifesto of the Communist
Party (to give it its original title) has
Fighting for Profit
with ‘’Famine? War? Pollution? been republished many times since
Capitalism is the Problem.  World its first publication in 1848. And now,
Stephen Armstrong: War plc. Faber
Socialism s the Solution’’ and party 160 years later, in this edition it has
and Faber £14.99.
tel. number on. a new Introduction by David Harvey.
  The Manifesto needs to be understood
Pens: in its historical context, in order to
In a world of
Blue and white, with blue ink ‘Only sift out the immediate demands of
sheep need leaders’ and a sheep plus 1848 from its timeless communist
and globali-
party website content. Marx and Engels emphasised
sation, it is
Red and white, with blue ink  ‘Workers this point in their 1872 Preface where
perhaps only
of the world unite’ plus party website they argued that already part of the
to be expected
Black with black ink.  ‘Only sheep Manifesto dealing with immediate de-
that combat
need leaders!’ and a sheep plus party mands (at the end of Section Two) had
and secu-
website become “antiquated”, a point which
rity activities
was repeated in the 1888 Preface.
should also be
Baseball caps: Harvey acknowledges this point
navy blue, with embroidered ‘’World but then goes on to claim that some
Private mili-
Socialist Movement’’ on. of these immediate demands – such
tary compa-
  as free education for all children in
nies are being
Balloons: state schools, a heavy progressive
different colours, with ‘’World Socialist or graduated income tax – are still
used to guard both people and places.
Movement’’ on. “wholly sensible proposals ... to rid
Oil companies, for instance, are
  ourselves of the appalling social and
starting to set up their own private
Prices: economic inequalities that now sur-
armies. Aramco is establishing a secu-
Tee shirts £7.00 each (state size round us”. But that was then and this
rity force to protect oil and gas fields
when ordering). Mugs £5.00 is now: however progressive those
and pipelines in Saudi Arabia, while
each. Pens £0.50 each. Baseball reforms appeared then, it is clear
the Russian parliament has given
caps £5.00 each. Balloons now that reforms of capitalism do not
permission for gas and oil companies
15p each. reduce social and economic inequali-
to raise corporate armies of their own.
ties. Harvey argues that eradicating
  But for the most part it is a matter
class privilege requires an organised
Postage and packaging of private companies that hire their
association of workers backed by
£2.50 for the first £10 and then £1.50 employees out to corporations and
democratic control of the state, and
for subsequent £10 worths or part governments, companies like Sandline
then adds in brackets “this is as far
thereof. Please send cheque or and Blackwater. The latter has its own
as the Manifesto goes”. But this is
postal order (no cash) made payable vast training camp in North Carolina
untrue: in the paragraphs preceding
to SPGB SW Regional Branch, and possesses helicopter gunships
the immediate demands the Manifesto
c/o Veronica Clanchy, FAO: South and armoured personnel carriers.
calls for the revolutionary “communis-
West Regional Branch, 42 Winifred The invasion and occupation of
tic abolition of buying and selling” and
Road, Poole, Dorset.  BH15 3PU. Any Iraq has fuelled the growth in private
other specifically communist demands.
queries, please phone 01202 569826. military companies. In 2006 there
Astonishingly, Harvey has nothing to
Please include own phone number or were 100,000 private contractors (as
say about this.
other contact details. they’re called) in Iraq, and Donald
Harvey refers to the collapse after
Rumsfeld regarded them as an official

20 Socialist Standard November 2008

November 08 BDH.indd 20 24/10/08 10:39:28

part of the US war machine. They
have increasingly taken on combat
on government spending”, a policy the
modern Liberals have recently re-
roles, and in September last year a adopted).
Blackwater convoy killed seventeen Basically, this is a plea for oppos- Film Nights
Iraqi civilians in Baghdad. ing your country’s foreign policy if it Sunday 9 November 4pm
Contracting out security tasks is “wrong”. So, not “my country right Zeitgeist
supposedly frees up government or wrong”, but only “my country if it Sunday 23 November 4pm
soldiers to do more actual fighting, is right”, by which Morris understood The War on Democracy
though the private forces are, as just anti-imperialist and anti-war. For him, Socialist Party Head Office, 52 Clapham
seen, getting more involved in combat Britain, un- High St, London SW4 (nearest tube:
operations. It is also claimed that they der the then Clapham North)
perform a useful service because new Tory govern-
states may not at first have properly ment of Lord
organised armed forces of their own.
They also mean big profits for their
owners, partly brought about by hir- was wrong
ing cheap labour from Latin America, to support Tuesday 18 November 8pm
including former thugs from Pinoc- Turkey Discussion on the Economic and
het’s Chile. And like other companies, against Rus- Financial Crisis
they are concerned about their im- sia in the Committee Room, Chiswick Town Hall,
age: one boss interviewed here says, Morris Balkans, to Heathfield Terrace, corner of Sutton Court
‘Even though it was making us lots of attack the Rd, W4
money at the time, we took a view of Zulus in South Africa and to invade (nearest tube: Chiswick Park).
Iraq and the margins and felt it was Afghanistan (which ended in disaster).
dragging our brand down.’ Incidentally, in saying that Britain
If any contractor is killed or in- should oppose Turkey (because of its London
jured, the company employing them massacre of Christians) Morris was
will fight tooth and nail to avoid pay- taking up the exact opposite position
Public Debate
ing compensation. The soldier’s family to that taken by Marx (who thought
Saturday 22 November, 6pm
will find their struggle made far more Turkey should be supported against
difficult by the complex web of owner- Russia), not that Marx is a model to Have we evolved to make money?
ship: a person from country X, fight- be followed here. Yes: Terence Keeley (author of Sex,
ing in Y for a company based in Z but Later, after he had become a Science and Profits)
officially registered elsewhere. socialist (partly from disillusionment No: Bill Martin (Socialist Party)
Making a profit from war is per- with the Gladstone Liberal govern- Room 407, Birkbeck College, Malet St,
haps the ultimate expression of the ment that came to power later in Bloomsbury, London WC1
profit motive. Armstrong’s book gives 1880), Morris argued that war and (nearest tubes: Russell Square, Euston
a good account of these developments, imperialist adventures could not be Square, Euston)
though notes and/or references would avoided by a change of foreign policy
have made it more useful. And the – a moral or ethical foreign policy was
publishers have a nerve charging this
much for a 250-page paperback that
impossible under capitalism, a lesson
the “Stop the War” movement of today
doesn’t even have an index. has yet to learn.
Monday 24 November, 8.30 pm
PB Florence Boos, in her introduction
(which is as long as the text), argues Discussion on The Great Bank Bail-Out
that Morris’s position at the time was Unicorn, Church Street, City Centre
influenced by the 19th century peace
Anti-war movement, whose origin and history
she outlines. She seems to exagger- East Anglia
ate the extent to which Morris could
Our Country Right or Wrong. By be regarded as a pacifist. After all,
Saturday 29 November 12 noon to 1pm
William Morris. Edited by Florence the chapter “How the Change Came”
branch business.
Boos. William Morris Society, 2008. in News from Nowhere does envisage
95 pages. £7.50. violence even if started by the rul- 1pm to 4pm lunch followed by discussion
ing class. But she does quote from a including on economics.
lecture on “Communism” that Morris Venue:The Conservatory, back room of
Before he became a socialist in 1883, gave in 1893 in which he argues: the Rosary Tavern,
Morris had been a Liberal, towards “The change effected by peaceful Rosary Road, Norwich. All welcome
the end on its Radical wing. As such means would be done more completely
he was in favour of trade unions, and with less chance, indeed with no
reforms to help the working class chance of counter-revolution . . . In IMAGINE
and a non-aggressive foreign policy. short I do not believe in the possible
The Fall 2008 issue of the journal
As this is the text of a talk given in success of revolt until the Socialist
of the Socialist Party of Canada has
January 1880 he was then still a party has grown so powerful in num-
Liberal, as can be seen from his praise bers that it can gain its end by peace- now arrived. A copy can be ordered
of Gladstone as “a great statesman” ful means, and that therefore what is for £1 (cheque made payable to “The
and his raising of the Liberal slogan of called violence will never be needed.” Socialist Party of Great Britain) from
the day of “Peace, Retrenchment and That’s not a bad way of putting it. the Socialist Party, 52 Clapham High
Reform” (“retrenchment” being what ALB St, London SW4 7UN.
today would be called “cutting back

Socialist Standard November 2008 21

November 08 BDH.indd 21 24/10/08 10:39:29

from page 13
inely intervene in the overall capital- leads later on to a reaction on the unfortunately became associated.
ist interest. A classic case was state part of society, which is threatened It seems to be a pattern that,
intervention in the 19th century to in the very sources of its life, and, whenever capitalists are given a free
regulate the working day. Having from there, to a normal working day hand to do what they want, they exag-
machines which could be kept going whose length is fixed by law” (Capital, gerate and go for short-term benefits,
24 hours a day, seven days a week, Vol I, Ch.15, section 3c). Society was even at the expense of their long-term
and faced with a glut of factory fodder, threatened “in the very source of its interest so that eventually the state
capitalist factory owners profited from life” in that factory owners so ruth- has to intervene to restrain them in
laissez-faire to extend the working lessly overworked their workers that their own interest. This seems to be
day. A large part of Marx Capital is their wealth-producing capacities, on the situation that has been reached
devoted to describing what he called which the future of society depended, today after twenty or more years of
“capital’s drive towards a boundless were being undermined. Marx sup- deregulation of financial markets. The
and ruthless extension of the working ported state intervention to stop this banks and other financial institutions
day” and how “the immoderate length- happening but he did not regard it as are now widely seen by other sec-
ening of the working day produced being in any way socialist. Others did tions of the capitalist class as having
by machinery in the hands of capital and socialism and state intervention abused their freedom and thus landed
the world capitalist system in the
The Labour Party Conference crisis it now finds itself in. This is why
the cry is going up for the re-intro-
The Labourites went to so well with the more brightly duction of a stricter state regulation
Scarborough this year, but coloured Tory jumble sale, and of financial institutions and dealings.
having arrived, they had now to vary the metaphor the And not just from the usual suspects
nowhere else to go. Why should Labour Party’s only appeal to on the Left, but from open support-
they? Apparently Labourites the voters: “Play the game, you ers of capitalism such as Sarkozy and
have not yet grasped the fact chaps, you’ve put the other side Gordon Brown.
that after the 1945 term of in twice, let us have a turn at It looks as if the opponents of “neo-
office they had no claim to batting.” liberalism” might well get their way,
be considered in the eyes of Nationalisation, which was at least as far as financial sector of
the voters as an alternative once the great plank of the capitalism is concerned. But there will
government. In 1945 they Labour Party, is now a heap of be nothing anti-capitalist about this.
went in on a wave of post-war Just a return to the “regulated capital-
sawdust and shavings which
ism” that used to exist in this sector.
enthusiasm. They put into was quietly swept up. Even the
effect what was for Capitalism 50 odd year Labour project, land
a necessary reorganisation of nationalisation was rejected.
certain sectors of British industry Nationalisation, which once
via nationalisation. They initiated helped to float S.S. “Labour,”
the necessary policies for is now in danger of sinking
restoring the debilitated condition it. Nationalisation rouses no
of the post-war economy and enthusiasm among electors and
bringing the social services in is a source of disillusionment to
line with the requirements of the Labour rank and file.
Capitalism. Picture Credits
p2: Keynes: p13: Sarkozy - © 2008
What else was left in their (From article by E.W., Agência Brasil, Creative Commons License
political ragbag? Only dull odd Socialist Standard, November Attribution 2.5 Brazil. p24: Baby - © 2006
remnants which did not show up 1958) Gengiskanhg. GNU Free Documentation License.

Declaration of Principles
This declaration is the basis of by the capitalist or master class, the emancipation of the working 7.That as all political parties
our organisation and, because and the consequent enslavement class wil involve the emancipation are but the expression of class
it is also an important historical of the working class, by whose of all mankind, without distinction interests, and as the interest of
document dating from the labour alone wealth is produced. of race or sex. the working class is diametrically
formation of the party in 1904, opposed to the interests of all
its original language has been 2.That in society, therefore, there 5. That this emancipation must sections of the master class,
retained. is an antagonism of interests, be the work of the working class the party seeking working class
manifesting itself as a class itself. emancipation must be hostile to
Object struggle between those who every other party.
The establishment of a system possess but do not produce and 6.That as the machinery of
of society based upon the those who produce but do not government, including the armed 8.The Socialist Party of Great
common ownership and possess. forces of the nation, exists only Britain, therefore, enters the field
democratic control of the to conserve the monopoly by the of political action determined
means and instruments for 3.That this antagonism can capitalist class of the wealth taken to wage war against all other
producing and distributing be abolished only by the from the workers, the working political parties, whether alleged
wealth by and in the interest of emancipation of the working class class must organize consciously labour or avowedly capitalist,
the whole community. from the domination of the master and politically for the conquest and calls upon the members of
class, by the conversion into the of the powers of government, the working class of this country
Declaration of Principles common property of society of national and local, in order that to muster under its banner to the
The Socialist Party of Great the means of production and this machinery, including these end that a speedy termination
Britain holds distribution, and their democratic forces, may be converted from an may be wrought to the system
control by the whole people. instrument of oppression into the which deprives them of the fruits
1.That society as at present agent of emancipation and the of their labour, and that poverty
constituted is based upon the 4.That as in the order of social overthrow of privilege, aristocratic may give place to comfort,
ownership of the means of living evolution the working class is the and plutocratic. privilege to equality, and slavery
(i.e., land, factories, railways, etc.) last class to achieve its freedom, to freedom.

22 Socialist Standard November 2008

November 08 BDH.indd 22 24/10/08 10:39:29

Lamont - When Cameron Got It Wrong
“Short-lived and relatively shallow”

avid Cameron is in the habit of sprinkling his of his passengers, on seeing Lamont crossing the road,
speeches, like throwing stale currants into a offered five hundred pounds to run him down. (He was
stodgy spotted dick, with unfunny jokes intended not to know, of course, that it could be left to Lamont’s
to persuade us that a ruthlessly ambitious, manipulative political friends to bloodlessly get rid of him later). He
politician can have a was associated with a recession rated
harmless sense of humour. in some quarters as the worst since
Remember the crack in the end of the war and his blithe
what was called his keynote assurance that it would be “short-
speech at this year’s lived and relatively shallow” did not
Tory Conference, that he inspire any more confidence than his
respects entrepreneurs later claim to descry “the green shoots
and he knows what he is of recovery” all around – although
talking about because he they were not apparent to his
goes to bed with one every struggling colleagues. This fixation
night and – in time to get with mouthing statements so unwise
the laughter rocking again that they could only haunt him
– wakes up with the same throughout his career was typified
person every morning. The by his telling the Commons, in May
eagerly tamed audience Norman Lamont, former Chancellor of the Exchequer. 1991, that “Rising unemployment
were enthralled as well and the recession have been the price
as amused and Cameron that have had to pay to get inflation
was able to forget that his bedtime entrepreneur – who, down. That price is well worth paying”. (He did not view
for those who have not been paying attention is his his own projection into unemployment, when it came, in
wife Samantha – is a very rich one; her father is an quite so positive a light).
Old Etonian stockbroker and 6th Baronet, her parents
are divorced and her mother is now Viscountess Astor. Panic
Lucky Samantha showed she has the common touch The big crisis in Lamont’s time so near to the top
when she said, in reply to a reporter’s question, that she of the greasy pole was “Black Wednesday”, that day in
lived “near Scunthorpe”; it would have gone some way to September 1992 when he oversaw Britain’s withdrawal
expunge the image of a blackened steel town summoned from the ERM. This was especially embarrassing for him
up by that misinformation if she had mentioned that the because only weeks before he had given a categorical
family’s home is Normansby Hall, a lush 300 acre estate assurance that nothing of the kind would happen:
which they have owned since the late 16th. Century. “There are going to be no devaluations, no leaving the
Clearly, the Cameron family’s bit of what the Tory leader ERM. We are absolutely committed to the ERM. It is at
calls “this broken society” is comfortingly intact. the centre of our policy” (26 August 1962). Little wonder
that Lamont was looking so unkempt when, on 17
Lamont September 1992, he emerged into Downing Street to face
In that same speech Cameron raised some the voraciously waiting hacks. Amid the panic that day
embarrassed titters among the laughs when he shyly interest rates were dizzyingly raised from 10 per cent to
admitted to having been an adviser to Norman Lamont 12 per cent and 15 per cent, then brought back to 12 per
when he was Chancellor of the Exchequer. The Labour cent. The Treasury was not alone in its panic; workers
Party, he said, never let him forget this episode in his who were buying their homes through a mortgage were
climb up the greasy pole. Quite right too – all Tories desperately worried about how they were to afford the
would like to forget Lamont, the memory of whose time in higher payments and whether there were more, similarly
charge of the Treasury tends to undermine any theories chaotic, days to come. They were probably too anxious to
about a Conservative government being inherently more notice on their TV screens, as Lamont came through the
able to tame capitalism’s crises than a Labour one. door of Number 11, that he was followed by a shadowy
Lamont was at Cambridge with some rising stars of figure, caught briefly and fuzzily by the cameras. It was
the Tory governments of the 1980s – Michael Howard, his “political adviser” – David Cameron, future Leader of
Kenneth Clarke, Leon Brittan John Gummer. How many the Opposition, who would one day bellow his scorn at
fantasy careers, climaxing in occupancy of Number Ten, Prime Minister Brown for floundering among the multi-
were sketched out on the backs of cafe menus in those crises of capitalism and who would then be anxious to
impatient days? Lamont held a succession of jobs until conceal his association with the ludicrous failure who
the Men in Grey Suits did for Thatcher; as Major’s Chief was once his boss.
Secretary to the Treasury he acquiesced in, and so had Habitual optimists may rejoice that a new age of
some responsibility for, the policy of Britain being part of transparency and candour has dawned with Cameron’s
the European Exchange Rate Mechanism (ERM). When confessed embarrassment at the memory of his time with
Major put himself up in the contest to succeed Thatcher Lamont. But forgetting a fretful past has been developed
Lamont managed his campaign and he was then to a very fine art by suitably ambitious politicians. There
rewarded by Major with the Chancellorship. would be, after all, an awful lot of embarrassment for
Lament’s time as Chancellor was not noteworthy them to misremember. Judge for yourself if this is likely
for its controlled tranquillity and optimism; indeed to happen or whether they will continue to see their
his public standing was so abysmally low that years future as survival through concealment and deceit.
later he recalled a London cabby telling him that one IVAN

Socialist Standard November 2008 23

November 08 BDH.indd 23 24/10/08 10:39:30

KIDS AND CAPITALISM to Future Combat Systems. It’s just a question ...Looking ahead to 2008 and 2009 inflation
The author of the Harry Potter books JK of adjusting as the world changes, and as the will also be on target. And we will never return
Rowling recently donated £1 million to the need changes,’ Army Secretary Pete Geren to the old boom and burst.” (quoted in Time,
Labour Party because she thought they were told reporters at the annual Association of the 13 October) He was warmly applauded by the
doing more to solve U.S. Army meeting. Labour benches and praised by the press for
the problem of child ...The Army’s FCS his sagacity and prudence. What a difference
poverty than the program is a family a year makes. Inflation stands at about 4.7
Tories would. She of 14 manned and percent, banks mortgage lenders have been
obviously could have unmanned aerial taken over on the verge of bankruptcy and
not seen the following and ground systems, a deep economic recession looks likely.
news item. “Millions tied together by Capitalism is an anarchic, uncontrollable
of children in the UK communications and system. Boom and burst are the very
are living in, or on information links.” foundation of capitalism. No doubt a future
the brink of, poverty, (Yahoo News, 6 Conservative Chancellor of the Exchequer will
a report claims. The October) Lots and in turn pretend that he can control this mad
Campaign to End Child lots of money to kill, profit system. Capitalism makes fools of the
Living in, or on the brink of, poverty bugger all for starving politicians who claim to be able to control it.
Poverty says 5.5 million
children are in families kids. That is how
that are classed as ‘struggling’ - 98% of capitalism operates. ANOTHER REFORM OF
children in some areas. The campaign classes CAPITALISM?
households as being in poverty if they are A MUCH BETTER IDEA When socialists see workers cram into buses
living on under £10 per person per day. ... The Robert Reich, former US secretary of labour, and underground trains on their way to work,
Campaign to End Child Poverty is a coalition commenting on the recent economic crisis we often remark that if cattle were crammed
of more than 130 organisations including showed that he understood that China was a into transport like that on their way to the
Barnardo’s, Unicef and the NSPCC. According capitalist country when he said “There are still slaughterhouse there would be a public outcry
to its research, there are 4,634,000 children in only two kinds of by Animal Rights
England living in low income families, 297,000 capitalism. There’s groups. Workers
in Wales, 428,000 in Scotland and 198,000 authoritarian are often
in Northern Ireland. It says 174 of the 646 capitalism as treated worse
parliamentary constituencies in Britain have in China and than animals
50% or more of their child population in, or Singapore, and but this latest
close to, the poverty line.” (BBC News, 30 there’s democratic outburst against
September) JK Rowling may be a very good capitalism as in the working
writer, but obviously she is not a great thinker. US and Europe. If class takes a
there’s anyone out A prod in the right direction? bit of beating.
CAPITALIST PRIORITIES there who has a “An Australian
We live in a society where millions try to better idea, I’m sure politician has
survive on a $1.25 a day, where children the world would love to hear it.” (Newsweek, used his first speech to parliament to call for
die for the lack of clean water and yet this 13 October) If someone can get us Mr Reich’s unemployed idlers to be stung with a cattle
society spends billions of dollars trying to address we will send him a subscription to the prod to get them to work. John Williams, a
find more efficient ways to kill people. The Socialist Standard so he can learn about the former truck driver, shearer, farmer and small
priorities of socialism would be to feed, clothe socialist alternative. Although we don’t think he business owner who only took his place
and shelter its citizens but capitalism has would be too impressed, because we want to in the Senate on July 1, said he had seen
other priorities. “Top U.S. Army officials on get rid of the exploitative system that gives him many people living on employment benefits
Monday said a $160 billion Future Combat a privileged existence. who were ‘determined not to work’. ‘They
Systems modernization program managed are simply getting a free ride on behalf of tax
by Boeing Co and SAIC Inc was ‘on budget, PUTING HIS FOOT IN IT payers of Australia and it is about time they
on track,’ but could see changes over time. Last year when he was Chancellor of the received a touch on the backside with a cattle
Army Chief of Staff Gen. George Casey said Exchequer Gordon Brown outlined his annual prodder to get them off their butts and actually
the Army was going through a detailed review budget speech with these words - “Britain’s do some work,’ he said.” (Yahoo News, 16
of 14 separate weapon systems included in growth will continue into its 60th and 61st September) To use his fellow Australians use
the program to ensure that the technologies quarter and beyond ...Inflation has fallen from of the language – what a bahstard!
involved were on schedule. ‘We’re committed 3% to 2.8%, and will fall further this year to 2%

24 0037 8259 Socialist Standard November 2008
Produced and published by the Socialist Party of Great Britain, 52 Clapham High Street, London SW4 7UN

November 08 BDH.indd 24 24/10/08 10:39:31