Source: Socialist Fight, vol. 1 no. 2 (February 1958)
Transcription: Nick 2008
Markup: Manuel 2008
Following on the heels of the capitalist economists, who have expressed fear as to economic developments in Britain and the world, the Daily Worker has begun a campaign on the question of the slump (January 4th).
Even here, the diseased state of mind of the leadership of the C.P., poisoned by Stalinism, is shown in the headline: “Can Britain Dodge the U.S. Slump?” Again, in the body of the article, this constant harping on the “American” responsibility for British ills is accentuated. “The American Slump is here. Will it affect Britain, as did a similar slump in 1949-50, leading, among other things, to a balance of payments crisis in Britain, to the devaluation of the pound?”
In keeping with the C.P. “line” of the moment, or rather, in consonance with Russian foreign policy, all the ills of British capitalism are to be laid at the door of the sinister Americans. Such an attitude, apart from being anti-internationalist, is entirely unscientific from the viewpoint of Marxian economics. Slumps start usually in America (though not always) ‑ not because the Americans are more wicked or stupid than the British, French, or German capitalists, but because American capitalism is the most developed and most dynamic in the world, and consequently the economic laws show themselves there more speedily. Similarly, in the 19th century, slumps usually began in Britain, because of Britain’s primacy as an industrial power.
This vulgar anti-American smear is an indication of the general tone of the article, which is written not to clarify and raise the level of understanding of the working class, but purely to confuse them in the interests of Russian foreign policy. J. R. Campbell, leading light of the Communist Party’s economic committee, says: “If Britain is threatened by a slump spreading from the U.S., is it not damned silly artificially to create a slump, as the Government is doing by its high interest rates and credit squeeze?” Is it not damned silly artificially to pretend that slumps and booms are created or can be prevented by capitalist governments and not by the laws of development of capitalist economy itself? It is true that this or that measure might delay or precipitate a slump, but in general tinkering with the economic system only makes the crisis worse.
It is true that the interests of the City of London and of industry sometimes clash, and one or the other is victorious. However, on this question of the bank rate and the credit squeeze, Big Business and the City are at one, because the interests of British capitalism as a whole are threatened. From a capitalist point of view, the enormous inflation engendered by the arms drive threatens to assume runaway proportions. At the same time, by creating a false market temporarily at home, the whole position of British capitalism would be undermined by “unsound finance” and precipitate an even worse crisis of deflation at a later stage.
Only recently the C.P. leaders crossed swords with John Strachey and other Labour economists, putting forward Keynesian ideas. Now Campbell cynically repeats the errors that he previously castigated. In The New Statesman of January 11th, Thomas Balogh, the foremost economist of the Labour Party, writes on similar lines.
“It all recalls the nightmare world of the late twenties, when the slump of 1929 was created equally artificially. Then, as now, the Bank of England, with the consent of the Treasury and in co-operation with the Americans, tried to deal with a specific problem…at that time stock exchange speculation…by a general restriction of credit. In 1929 they had succeeded in causing a general collapse leading directly to Hitler’s victory in Germany and ultimately to war. Such an ill-starred triumph is unlikely now! Prices and wages are still on the increase and the restrictive policy will probably be frustrated by the increase in armaments. But if the bankers had their way, they would once more plunge us into depression because of their obsessive hostility to direct controls and their reluctance to co-operate with the trade unions in hammering out a conscious wage policy with all that that implies in terms of social policy and taxation.”
Campbell and Balogh are at one. The only difference is that Balogh is honestly mistaken. Campbell, with his erstwhile Marxist training, knows better, and would not dare to argue that the last slump was caused by these policies. An example of this is provided in the Economic Bulletin of the Communist Party, published by the Party’s Economic Committee (November, 1957). On page 25, Campbell writes: “How far can the state fix the level of interest? This is an important question to us, but it would seem that the rate must be related to general activity and can only operate within narrow limits.”
Marx explains in Volume III of Capital, that the development of credit has the result of extending capitalist production beyond the boundaries set by the limits of capitalism itself. What he means is that, for the purposes of capitalist production, i.e. production for profit, by means of credit policies the market is expanded beyond the limits set by the private ownership of the means of production. Capitalists produce more than is required by the market. This is due, on the one hand, to the fact that the producers of capital goods have credit extended to them and, on the other, that through hire purchase, mortgages and other means the consumers, too, actually purchase beyond the limits of their levels of income. When the serious representatives of the social system realise that this process has gone too far and threatens its very foundations, they are compelled by economic necessity to call a halt.
It is not the “obsessions” of the bankers nor the “stupidity” of the capitalists and their representatives which cause them to act in this way. The cause lies in the contradictions of the system itself. Macmillan, Thorneycroft, and Butler, have declared that without the squeeze and the rise in the bank rate, the British economy would face catastrophe, and they are right. It is true that in 1929, and again today, these measures will precede slump. But the slump will not come because of these measures, but in spite of them (see the article, “Slump This Year?” in Socialist Fight. January, 1958).
These policies, both in Britain and America, were not dictated by the industrialists and bankers, but on the contrary were dictated to them by the state of the economy. The reason why usually the bank rate rises before a slump is because, for the reasons given above, credit pushes production beyond the limits of the capitalist system. Balogh is like a doctor who reads a thermometer registering 104 deg. and prescribes…the smashing of the thermometer! The bank rate falls during a slump for exactly the same reason that it rises beforehand. In 1929 the swift changes in the U.S. bank rate within a few months from 6 to 2 per cent could not prevent the economic collapse.
Left Wing Socialists have to understand that no monetary tinkering can solve the problems induced by the inherent tendencies of the social system. From the point of view of the working class and of the Labour Movement, neither inflation nor deflation can serve their interests. It is a choice of death by fire or death by exposure.
What then is the answer to the problems posed by the economic recession and the developing slump? It must constantly be hammered home by the advanced elements in the Movement that only the overthrow of capitalism and the establishment of a planned economy with the nationalisation of big industry under workers’ control, can provide a final solution to these problems.
Meanwhile, as steps in this direction, and in order to raise the level of consciousness of the workers for this basic goal, certain transitional demands have to be put forward. No sackings! The 40 hour week! Work or full maintenance! No collaboration between the trade unions and the bosses, or between their representatives in Parliament! For a sliding scale of hours! The taking over of “redundant” concerns and their operation by the workers! Not the profits of the capitalists, but the needs of society, must determine production!
How does the great r-r-revolutionary, Campbell, face up to the problem of the slump? He demands that the Labour Party must press for the ending of “all U.S imposed bans on trading with the socialist world” (British and French imposed bans can stay, presumably!) He is not to be outdone, in his patriotism, by any true-blue Tory. “Why is it (the Labour Party) not insisting that the Government reach agreement with the Dominions and colonies in the stabilisation of raw material prices?” (Here speaks the authentic voice of the Campbell-Beaverbrook United Front). But Campbell out-beavers the Beaver. He goes on: “And surely this is a time to be demanding bilateral agreements between Britain and raw material producing countries in the capitalist world other than the Dominions, ex-colonies and colonies.”
The whole point of this essay in jingoism is indicated by the demand for unity in forcing summit talks. For the purpose of reaching a temporary agreement with the Soviet bureaucracy, Campbell is prepared to prescribe for the working class some cures that will increase the ill. He refers to the special type of medicine man, who infest the City, “continuing to chant their abracadabra about a strong pound.”
But the abracadabra of Campbell, the ex-Marxist medicine man, can confuse and hamper the working class in its struggle to purge society of the evils of capitalism.