The Great Crash 1929

"We are heading into a storm and it's reminiscent of the 1930s", warns investment guru George Soros

This was in the Daily Mail today. 1929 and the Great Crash invariably comes up as people discuss the turmoil capitalism is undergoing at present. Crises do not repeat themselves - it is worth, though, looking at the events of 1929 and afterwards.

The following article (by ALB) was published in the October 1979 Socialist Standard

FIFTY YEARS AGO, on Tuesday 29 October, the boom in the price of stocks and shares on the New York stock exchange came to an abrupt end in what has gone down in history as the Great Crash.

Stocks and shares are titles to ownership of part of a business. They entitle their owners to a percentage of the profits of that business in the form of dividends or, in the case of certain kinds of shares, fixed interest payments. In theory the price of a share refects the value of the firm's assets. In practice it fluctuates with the firm's profit-making record and expected profits. It is this latter that introduces an element of gambling into shareholding, since the firm can never know in advance whether or not it will in actual fact make the hoped for profits. If it doesn't then the price of its shares will fall and the shareholders will suffer a loss. If it does then the price of its shares will increase and the shareholder will receive a capital gain as well as a dividend.

A stock exchange boom is essentially a period of speculation for capital gains in rising share prices. It need have nothing whatsoever to do with the profit-making record or prospects of the firms whose shares are traded. It is enough that there is a sustained excess of buyers over sellers on the stock market. With prices continually rising, capital gains can be made simply by buying shares one day and selling them the next. A telephone call is ail the effort required.

Until October 1929 there was such a boom on the New York stock exchange. Share prices were rising, and everybody expected them to go on rising. Stories of people 'getting rich quick' from buying and selling shares encouraged others to try their luck. Actually, as long as the boom continued it was not a question of luck at all but a matter of having money. If you didn't have ready cash, you could borrow the money to buy the shares. Certainly you needed some collateral, but there were cases of shares already bought on loans — and even of the shares to be bought by that loan - being accepted as collateral.

The trouble with a speculative boom of this sort is that it cannot go on for ever. Sooner or later the excess of buyers over sellers must disappear. Everybody knows this, but investors can't resist the temptation to make easy money.

The Great Crash was followed by a severe industrial depression, summarised by J.K. Gaibraith in his very readable book on the subject:

After the Great Crash came the Great Depression which lasted, with varying severity, for ten years. In 1933, Gross National Product (total production of the economy) was nearly a third less than in 1929. Not until 1937 did the physical volume of production recover to the levels of 1929, and then it promptly slipped back again. Until 1941 the dollar value of production remained below 1929. Between 1930 and 1940 only once, in 1937, did the average number unemployed during the year drop below eight million. In 1933 nearly thirteen million were out of work, or about one in every four in the labour force. In 1938 one person in five was still out of work. (The Great Crash 1929, Pelican, p. 186.)

One school of thought, the monetarists, sees the Great Crash and Great Depression as the outcome of government interference in the 'natural' workings of capitalism. According to them, the stock exchange boom and its inevitable crash were caused by the monetary policy pursued by the US government and central bank (the Federal Reserve Board). What gives monetarist explanations of this crisis, and of crises in general, a semblance of plausibility, is the fact that monetary bungling can aggravate a crisis. And there is no doubt that in the years up to 1929 the Federal Reserve Board, in pursuing a cheap money policy with easy credit and low interest rates, did encourage the stock exchange boom, and so helped make the crash all the greater when it came. A stricter monetary policy might have cut short the boom at a much earlier stage and thus prevented so great a crash, even if not a minor one, but the question is: would it also have avoided the Great Depression?

Here the answer must be no. For a slowing down on economic activity was evident in the summer of 1929, some months before the Crash (a knowledge of this must have been a factor in bringing the stock exchange boom to an end). This downturn was particularly evident in the consumer goods sector, where the firms concerned had overestimated demand and were finding themselves lumbered with excessive stocks. In other words, the depression was going to happen anyway, whether or not there had been the stock exchange boom and crash. More fundamental economic factors were at work than speculations on the stock market or the monetary bungling of the Federal Reserve Board.

An attempt to identify these fundamental economic factors using the categories of Marxian economics has been made by Sydney H. Coontz in Productive Labour and Effective Demand (1965) and by Ernest Mandel.

A depression is the result of an unbalanced growth of one sector of the economy having expanded too fast for the other sectors. Simplifying matters, the economy can be divided into two main sectors, the one producing means of production (sometimes called 'capital soods" or, more accurately, 'producer goods'), and the other producing consumer goods. The conditions for steady, balanced growth under capitalism can then be stated to be:

The purchase of consumer goods by all the workers and capitalists engaged in producing capital goods must be equivalent to the purchases of capital goods by the capitalists engaged in producing consumer goods (including in both categories the purchases needed to expand production). The constant reproduction of these conditions of equilibrium thus requires a proportional development of the two sectors of production. The periodical occurrence of crises is to be explained only by a periodical break in this proportionality or, in other words, by an uneven development of these two sectors. (Mandel. Marxist Economy Theory, Vol I , p.349.)

What happened in America in the 1920s was that the producer goods sector expanded too fast for the consumer goods sector. Production and productivity increased while wages and prices remained comparatively stable. Wages did in fact rise, but the main benefits of the increase in productivity went to the capitalists in the form of increased profits. Most of these additional profits were reinvested in production (though some found their way to the New York stock exchange). It was this that led, according to figures quoted by Galbraith, to the rapid expansion of the producer goods sector as compared with the consumer goods sector:

During the twenties, the production of capital goods increased at an average annual rate of 6.4 per cent; non¬durable consumers' goods, a category which includes such objects of mass consumption as food and clothing, increased at a rate of only 2.8 per cent. (pp. 192-3)

An expansion of the producer goods sector at a faster rate than the consumer goods sector is not in itself a situation of disproportionate development. Indeed, it has been precisely the historical role of capitalism to build up and develop the means of production at the expense of consumption. But so-called 'production for production's sake' cannot in practice continue indefinitely, since it demands either a sustained series of new inventions and innovations or a continually expanding market for consumer goods.

The relatively full employment in America in the 1920s — unemployment was officially only 0.9 per cent in 1929 - did mean that the market for consumer goods expanded, but the falling share of wages and salaries in National Income meant that this was not going to continue. The expansion of the producer goods sector levelled off, further retracting the market for consumer goods since its workers now had less to spend. Expressed in terms of the formula for balanced growth stated above, the purchase of consumer goods by the workers (and capitalists) in the producer goods sector had come to be less than the purchase of producer goods by the capitalists in the consumer goods sector. In other words, an overcapacity had developed in the consumer goods sector, which expressed itself in an overproduction of consumer goods and the build-up of stocks. As Coontz puts it (using the language of academic economics):

. . . stagnation in the capital goods industry, the displacement of labour in this sector, meant that worker and entrepreneurial consumption expenditures failed to rise pari passu with investment in the consumer sector. It was this disproportionality that generated the Great Depression, (p. 154)

The Great Depression — which occurred all over the world and not just in America - was not an accident, but simply capitalism working in a normal way. It exposed capitalism for the irrational, anti-socia! system that it is. While millions were unemployed and reduced to bare subsistence levels, food was destroyed because it could not be sold profitably. It was in the 1930s that the Roosevelt administration introduced the notorious policy of paying farmers not to grow food, a policy accurately described by a later President, Kennedy, as 'planned underproduction'. Even in times of boom and prosperity capitalism underproduces, but in times of depression this is even more flagrant.

The Depression eventually came to an end — with the war and preparations for war.

Capitalism: boom & bust

The downturn in the global economy appears to be broadening and deepening. The sub-prime slime has became the "Credit Crunch" in 2008, and last month heralded a further round of casualties on what some are starting to call "Manic Monday".

US house repossessions started it all off, followed by mortgage lenders and banks in Europe. But more recently the US government felt unable to allow their Freddie Mac and Fannie Mae (public mortgage lenders) go under, but stopped short of baling out Lehman Brothers.

The contagious fear of vanishing profits extended beyond mortgages to insurance giant AIG and beyond, and the geographical spread has widened to China and Japan.

Workers could be excused feeling some sort of schadenfreude at the news of a bank running out of money or an insurance company failing to manage risk and hedge their bets. Who can fail to smile as another financial institution is found to have ignored its own advice ("The value of your investment can go down as well as up. You may not get back the amount of money you invested and should only invest sums of money you are prepared to lose").

So there may be fewer stories in the news of £100 burgers in the bistros or £30,000 drinks bills in the restaurants of the City of London, but of course the economic downturn impacts more on the poor than the rich.

World socialists are opposed to capitalism – boom or bust. Recession just helps throw into sharp relief the logic of the market system. It does however also provide a good opportunity to highlight some important differences between capitalism, and socialism – where money and wages would not exist and production of wealth would be based on meeting real human needs.

Firstly of course inside socialism there will be no work at all for the whole financial sector that is under such pressure at present. Pensions advisors, insurance salespersons, "independent" financial advisers, mortgage brokers, fund managers: all of these jobs are essential to the smooth operation of capitalism, but are socially-useless and would have no place in a socialist society.

Over 1 million people in the UK – 4 percent of the workforce – are engaged in such activities which are wholly useless. When you factor in related jobs such as accountancy, real estate, and ancillary financial services the numbers mount up. Socialism will really make these positions redundant, but with the pay-off that people will be free to engage in work that is genuinely productive and socially useful.

But there is another less obvious way in which the market system is an incredibly wasteful mechanism for organising the production of wealth. Arguably, one of capitalism's "unique selling points" is that the money system provides a mechanism whereby the cost of all aspects of a product or commodity can be expressed in a single number, a common denominator or price, thereby allowing a simple means of comparison: the cost of a barrel of oil can be quantified against an acre of land, or a gram of cocaine. A sure thing now can be hedged against a risk tomorrow.

But the benefits of this are dubious. And in any case, behind the apparent simplicity and power of comparing like with like around the world, minute by minute, and even hedged into the future, the reality is very different. This reduces your power over production. Interest rates rise in the US, and a hospital gets mothballed in the UK? The oil price rises and thousands of holidaymakers get stranded in a foreign country? The need for constant minute-by-minute re-evaluations of cashflow projections or return on investment expectations, for every project, every industry, every product results in a colossal waste of the planet's resources and humanity's energy and ingenuity

Brian Gardner

Peace in Palestine?

Fifteen years ago today at the White House, the Prime Minister of Israel Yitzhak Rabin and PLO chirman Yasser Arafat shook hands after signing an accord granting limited Palestinian autonomy. Did these two dead terrorists believe that anything resembling lasting peace would result from their discussions? If so they were deluding themselves, as Socialists made clear at the time:

Peace is always better than war. Because wars are never fought in the interests of ordinary people. And because in wars it is always ordinary people who suffer. So, irrespective of the issues involved or the terms agreed, Socialists can only welcome the ending of any war in any part of the world. Stop the killing is our permanent policy.

In that artificial subdivision of the old Ottoman Empire known as Palestine, those who suffered from the irrational attempt to set up a Jewish State there have been both the original population - whether of Muslim, Christian or Jewish religious background - and those who were misled by the Zionists into emigrating there.

Socialists and Zionists have been opponents since the beginning. Inevitably, as they represented two incompatible views as to the solution workers of Jewish background should seek to the problem of anti-semitism.

The Socialist attitude was expressed early on by Karl Marx, himself of course of Jewish background even though brought up a Christian. In one of his first articles after becoming a Socialist Marx argued that Jewish people should seek emancipation, not as Jews, but as human beings. To do this they should abandon their religion - just as Christians should abandon theirs - and become members of a secular human community in which money and the state should be abolished, i.e. Socialism. In the meantime, under capitalism, Jews should enjoy the same political rights, in a secular democratic state, as Christians and others.

The Zionist movement propounded the opposite view: that the Jews were a separate nation and that as such they were entitled to their own state, in Palestine. People of Jewish background should not seek emancipation as human beings, but as Jews. Neither should they seek integration within the political states in which they found themselves, but separation in a state of their own.

The battle lines were thus drawn and throughout Europe and America Socialists and Zionists vied for the support of workers of Jewish background. Socialists argued against the idea that the Jews were a nation or a race; most Jews were workers and should join with other workers to achieve socialism which would mean “the emancipation of all mankind without distinction of race or sex”. Even though many Zionists were not religious, all they had to go on to justify Palestine as the place for their Jewish State was an irrational belief, the religious myth set out in some holy book that the Jewish God had given Palestine to the Jews to be their homeland.

Many Jewish workers were convinced by the Socialist argument and rejected Zionism, and played - and still play - a considerable part in the Socialist movement. Most Jews rejected Zionism in practice - and still do - by integrating into the countries where they lived. The terrible experience of the Second World war, however, convinced many (though by no means most) European Jews to embrace the idea of a Jewish State.

In l948 the Zionist dream was realised. Palestine was partitioned and a State of Israel established. Zionist extremists practised what is now called “ethnic cleansing” and hundreds of thousands of non-Jewish inhabitants of the Israeli part of Palestine were driven from their homes. Those who remained suffered the same fate the Zionists sought to free Jews from: being a minority in someone else's "nation state".

The establishment of Israel did not end anti-semitism. In fact it caused it to spread to where it had never existed before - to the Arab-speaking parts of the world. For centuries Jews had lived in peace and security, integrated and speaking Arabic, in these parts of the world. Now, as a direct result of the establishment of a Jewish State in Palestine, they came to suffer the same persecution that the European Jews had. The result was that centuries of integration was undone in decades. Today there are virtually no Jews living in Arab countries: most Arab Jews are now in Israel where they form an underprivileged group.

Opposition to Zionism does not mean that we support the PLO. Unlike some, we don't single out Jewish nationalism for special condemnation. We should condemn all nationalisms equally. The “Palestinian nation” is just as much a myth as the “Jewish nation”, or any other nation. Nationalism is the ideology which seeks to justify the capitalist division of the world into separate “nation-states”, each competing to gain a place in the sun for its ruling class and each with killing machine. We should utterly reject this view of the way humanity should organise itself.

As Socialists we re-affirm that all peoples should seek their emancipation, not as members of nations or religions or ethnic groups, but as human beings, as members of the human race. They should unite to abolish the division of the world into so-called nation-states and to establish a World Co-operative Commonwealth in which we will all be free and equal members - citizens of the world, not subjects of nation-states.

(Socialist Standard, October 1993)

The poverty line in Turkey

"The Turkish Statistics Institute (TurkStat) sparked an outcry earlier this week by recommending to civil servants' unions that TurkStat's food poverty line of YTL255 (£116) a month be adopted instead of the higher figure proposed by the unions during their negotiations on salary hikes and benefits." Ercan Han of the Turkish Public Workers' Labour Union said that TurkStat has been using the method adopted by the World Bank, World Health Organisation and the United Nations which use the food poverty line as a tool in determining starvation criteria for the world. Han, "this calculation does not take into account non-food expenditures such as housing and to satisfy basic needs."

"This food poverty line, the minimum amount of money required to buy the necessary food for subsistence, was declared by Turkstat to be YTL255 a month for a family of four. The food poverty line favoured by unions is determined according to the minimum financial income recognised by society as needed by a person for food and other basic needs including housing and transportation to and from work. The Public Workers' Labour Union calculate this to be YTL1,012 (£460) to include housing, heating, lighting, clean drinking water, transportation and communication." "YTL255 means YTL2 or 3 (90p-£1.36) per person a day," said the president of the Civil Servants' Union. "If they –TurkStat – insist on this amount we will ask them to go out and try to survive on this little amount of money. Maybe they could empathize then."

In the same week in a Turkish language local paper are some special offers for Ramadan from a cut-price supermarket: Special pack: 1kg each of rice, bulgur, dried beans, lentils, flour; 500g of tomato puree, macaroni, tea; 750g of sugar and salt and 1ltr of cooking oil. YTL20 (£9.00)

What will YTL255 purchase? In a 30-day month it equates to YTL60 a week. One special Ramadan pack (absolute basic needs for a week) YTL20.

Average weekly bread consumption for four people YTL40. This leaves nothing at all for dairy products, eggs, olives, fresh vegetables, fruit, /meat!/ and (if you live in Izmir) water at about YTL4 for 40 litres. Tap water costs about YTL 12.5 per cubic metre and is billed bi-monthly. Also not factored in are electricity, cooking gas, winter heating, housing costs such as rent and council tax, laundry and household cleaning requirements, personal care items, clothes and transport. Current fuel prices are; diesel £1.30, 95 octane petrol £1.50.

[Information taken from a national, daily, English language, Turkish newspaper, "Today's Zaman" (Today's Times), sister paper of the widely read Turkish language "Zaman" (Times), August 28th 2008.]

J.S.

Terrorism versus terrorism

On the 7th anniversary of the suicide attacks in the US which resulted in over 3000 deaths, for Socialists our message is unchanged:

"The 'free world' is not free and it is not democratic. As the ruling class tries to drum up support for yet more terror, we urge our fellow workers to get involved in no war but the class war."

Socialist Standard, October 2001

Stephen Jay Gould

On the anniversary on the birth of the famous scientist Stephen Jay Gould, who sadly died in 2002 at the young age of sixty, readers might like to see what Socialists have to say about his work, evolutionary theory and related matters:

Gould v. Dawkins

Dawkins wars (1 & 2)

Socialism & Darwinism

Why Gould was wrong, and why Dawkins might be even more wrong

Are we prisioners of our genes?

The November 1959 Socialist Standard was billed as a Darwin centenary issue to mark 100 years since the publication of the Origin of Species. Next February sees the 200th anniversary of Charles Darwin's birth, an event which is likely to be commemorated by the Socialist Party.

Mao

Mao Zedong died on this day in 1976. Described variously as a dictator or 'Communist leader', the latter a contradiction in terms, at least he was correct to point out in 1949, the year the People's Republic of China was founded, that the new society would not be Socialist:

"To counter imperialist oppression and raise her backward economy to a higher level, China must utilize all the factors of urban and rural capitalism that are beneficial and not harmful to the national economy and people's livelihood...Our present policy is to regulate capitalism, not to destroy it."

Mao also stated that such development would mean "several decades of hardship". Mao was right but, of course, wrong about the timescale: the hardship continues. The true level of suffering though beggars belief:

"..In the purges carried out since 1949 the total number executed is estimated at well over 10 000 000.." (The Western Socialist, January-February, 1955). Note the date of publication, over a decade before Mao launched the Cultural revolution! That same article concludes:

"While someday the Chinese will produce automobiles instead of rickshaws, will produce all the various consumer and capital goods that the industralized West produces, and the commissars of the "People's Democracy" will delude them with the propaganda that they have advanced into Socialism, the status of the Chinese workers will still be that of workers of the world over - wage slaves for a master class. Until this relationship is done away with there will be no Socialism."

More on Mao and China

Freddie and Fannie

It is not uncommon to hear some right-wingers say that Government intervention in the economy is the preserve of Left politics. That this is untrue can be seen from the past - all that has differed has been the scope of such intervention and the purposes served.

A further case in point is today's news that Freddie Mac and Frannie Mae are to be bailed out by temperorary Public Ownership. As the Guardian website reports

The US government today announced the biggest financial bailout in the country's history as it took troubled mortgage giants Freddie Mac and Fannie Mae into temporary public ownership to save them from collapse.

The US treasury secretary, Henry Paulson, said the Federal Housing Finance Agency, hitherto the two companies' regulator, would henceforth run the companies in a state of "conservatorship" and the two chief executives would be replaced by new men.

Paulson had briefed presidential candidates Barack Obama and John McCain over the weekend about the plan. McCain gave it his immediate backing but Obama said he would reserve judgment until he saw further details, adding that determining the future of the companies would be a top priority if he won the White House.

Interestingly, the Republican McCain gave immediate backing.

Governments of whatever hew will step in pretty quickly if some business is deemed of sufficient importance. As the Guardian writes

The US government was forced to announce a plan to prop up the finances of the troubled mortgage giants in July. Paulson said then that Washington would buy up shares in the two companies and underwrite their ballooning debt, which has risen to around $800bn (£452bn) each. Congress at the time approved lending unlimited amounts to the two companies or taking a stake in them if they ran into real trouble.

The two companies have lent or underwritten about $5.3 trillion of the total $12tn of outstanding mortgage debt in the United States. Freddie and Fannie have long been considered as being too big to be allowed to fail.

Socialist Standard September 2008

Pages: 1 2 3 4 5 6 7 8 9 10 11 12

editorial: contents: Also available as HTML (image lite) and PDF

Pages: 13 14 15 16 17 18 19 20 21 22 23 24

10 reasons why Palin could be a MILF

This summary is not available. Please click here to view the post.

Then as now

"Everywhere I could reduce men into two classes both equally pitiable; in the one the rich who was the slave of his pleasures; in the other the unhappy victims of fortune; and I never found in the former the desire to be better or in the latter the possibility of becoming so, as though both classes were working for their common misery...; I saw the rich continually increasing the chains of the poor, while doubling his own luxury, while the poor, insulted and despised by the other, did not even receive the encouragement necessary to bear his burden. I demanded equality and was told it was utopian; but I soon saw those who denied its possibility were those who would loose by it..."

The Marquis de Sade wrote the above before 1788. Wherever you look in the world today you will find a small, parasitical minority suffering an embarras de richesses and the toiling masses for whom suffering unnecessarily is very much part of their everyday lives. But even de Sade would find some examples of class divided society shocking. Consider King Mswatti III the absolute monarch of Swaziland. Virgins have vied for his favour: more than 50,000 of them sought to become his 13th wife in 2005. One of them, a 16 year old explained, not unreasonably, that she wanted a nice life, a BMW and a cellphone. This weekend, the king is throwing a party to celebrate his 40 indulgent years and Swaziland's 40th anniversary of independence. Eight of his wives have recently returned from a shopping spree in Dubai. Let's hope they read the Socialist Standard and therefore recall that he already has a ".. Daimler-Chrysler Maybach 62, powered by a six-litre bioturbo engine, and fitted out with a television, a 21-speaker surround sound system, a heated steering wheel, champagne flutes within reach of the fully reclining seats, a refrigerator, a cordless telephone, a gold bag and a pollen and dust filter..." The cost? A mere £360,000. But such is small change, after all million$ have been spent in order for the king to enjoy his right to party. Remember this is a country where "..more than 80 percent exist on one US dollar a day, and almost 40 percent of adults have HIV/AIDS, the highest rate in the world." There have been demonstrations at such waste amongst so much want, but if one report is to be believed even "...Mswati's sharpest critics say they don't want to overthrow the monarchy. "He can be a king, but with fewer powers," said 32-year-old Moses Gama, a member of a militant opposition group." Sharpest critic?! If only the journalist bothered to ask a WSM member existing in Swaziland, such as Mandla Ntshakala ( PO Box 981, Manzini)! Verily, the meek will not inherit the earth! No that will take an enlightened majority, as the first reasoned socialist recognized: "You can only govern men by deceiving them; one must be hypocritical to deceive them; the enlightened man will never let himself be led, therefore it is necessary to deprive him of enlightenment to lead him as we want..."

Why you should (still) be a socialist

Communism died on this day in 1991. Following the dissolution of the the so-called Communist Party of the Soviet Union, some six days later Le Monde informed us:

"Communism is dead - the word, the party, the empire, the theology, it's all dead and everyone is happy...Mr Gorbachev was the timorous individual who started the progress...on the road which history had forced upon him, into the brilliant sunshine of the market economy. Are not the communists, if any are left, blind men and women who never understood that capitalism has taken over human destiny, that there would no longer be a Revolution but rather an eternal reform making the rich a little less rich, the poor a little less poor, not overnight but through the patient work of centuries, promising freedom and bread for all?"

Le Monde's view was a typical example of the myth-making media at work. The Socialist Standard of October 1991 replied to such nonsense unequivocally:

"The fundamental error - more than error: grand deception - upon which such reasoning is based is twofold. Firstly, the Leninist revolutions did not remove capitalism. Secondly, "the brilliant sunshine of the market" still does not shine upon the workers who form the majority of the world's population; on the contrary, we live under black clouds of debt, poverty, pollution, war, mass starvation, economic anxiety, all of which are direct consequences of the system of production for profit."

Mr Brown and Mr Bean

In his last speech as Chancellor in 2007 Gordon Brown boasted that “after 10 years of sustained growth, Britain’s growth will continue into its 59th quarter - the forecast end of the cycle - and then into its 60th and 61st quarter and beyond”.

There was always something dishonest about this. There are only 4 quarters in a year, so if growth was going to be sustained into a 59th quarter, this must have meant that it had been going for nearly 16 not just 10 years - in fact since 1992, when the last recession ended. Ten years was chosen by Brown of course since it was ten years previously that he became Chancellor following the Labour victory in the 1997 General Election.

Brown’s boast was supposed to imply he had devised a way of breaking the boom/slump cycle and avoiding a recession. As he predicted (or, more accurately, guessed), growth did continue into the 59th, 60th and 61st quarters (the last three quarters of 2007) and “beyond” into the 62nd, but only just. Corrected figures just released for the 63rd quarter (April to June this year) show that growth has now stopped. The expectation is that the 64th quarter will show a fall. If the 65th does too, as is highly probable, then the British economy will officially be in recession (defined as two successive quarters of “negative growth”, i.e. decline). But we won’t know till the figures are announced sometime next year.

Brown’s boast has been exposed as groundless. He didn’t engineer growth. He just happened to be Chancellor (just like his Tory predecessors from 1992) when world market conditions allowed an expansion of the British economy. Now that they no longer do so, there is nothing he or any other Chancellor can do about it. But if he is being blamed it is his own fault for claiming that the ten-year period of “sustained growth” was due to the policy he chose to pursue.

He can’t have it both ways. He can’t claim credit for the growth years and blame the world market for the bad times. If he’s responsible for the good times then he must also be responsible equally for the bad times. Actually, he’s responsible for neither since governments and finance ministers do not control the workings of the capitalist economy.

Meanwhile the Deputy Governor of the Bank of England Mr Bean - yes, that’s his real name - says that he and his colleagues are crossing their fingers that things won’t get too much worse . Which is about all they can do.

Stalin the God and Stalin the Gangster

Judging by his latest article, Simon Sebag Montefiore and Vladimir Putin both share a passion for distorting history. The former describes Stalin as "Marxist fanatic" and writes "When Vladimir Putin presented Russian teachers with their new textbook last year, Stalin appeared as “the most successful Russian ruler of the 20th century”" Putin here reveals his blood red capitalist colours, as from what other perspective could Stalin's pitiless rule be seen in a positive light? Montefiore's nonsense is in the same league as a poem published in Pravda (28th August 1936):

O Great Stalin, O Leader of the Peoples,
Thou who didst give birth to man,
Thou who didst make fertile the earth,
Thou who dost rejuvenate the Centuries,
Thou who givest blossom to the spring...

Stalin died in March 1953. He was no Marxist as Monttefiore and his ilk claim. Indeed, "It was Stalin who completed the work begun by Lenin, the turning of Marxism, a revolutionary doctrine into its opposite an authoritative ideology of State Capitalism on a par and at times competing with other state ideologies, i.e. Hitler's National Socialism and Mussolini's Corporate State." (Socialist Standard, April 1953) Read more here and remember that leaders come and go but capitalism continues to bring fear, misery, war and want to the multitude.

1968 and all that

The following is an extract from an old TV review column ("Between the Lines") that was published in the Socialist Standard. Apart from being droll, it makes some observations that are still relevant today - Gray

Back in the late sixties, while thuggish cops kicked hell out of anti-Vietnam war demonstrators in Grosvenor Square and the Beatles sang "you say you wanna revolution", your reviewer was quietly tripping out on Junior Disprins, listening to John Peel on pirate Radio London and occasionally paying attention to my old man who told me that Harold Wilson was no more a socialist than Bob Dylan could sing. He was right about (Lord) Wilson, wrong about Dylan and now a lot of the Grosvenor Square victims are members of the SDP and like to recall their youthful rebel days.

World In Action (8:30 pm, ITV, January 4) was all about three of those rebels of 1968. Using film clips of the heady days when lads with duffel coats and earnest expressions were going to change the world, the programme jumped on to 1988 when Thatcher reigns supreme and young trendy lefties have turned into middle-aged, compromising bores. The first was Mike Tomkinson, then President of the LSE students' union, now a man who writes for the Digger and believes that the establishment is here to stay. Second bore was Dave Clarke (no, not the one who made bad records then and no records now) who owns his own business in Docklands publishing a local newspaper. Clarke, whose line in cliches has not changed much in twenty years, is shown in 1968 declaring that violent revolution is what we must prepare for and in 1988 admitting that Thatcher's put some good old life back into the profit system and — I bet you've never heard this one - if you're not a socialist before you're twenty you have no heart but if you're a socialist after you're forty you have no brain. Dave did not explain what you are supposed to be between twenty and forty, although he seems to have maintained a sort of permanent mindless dullness throughout the whole process.

Dave looks into the camera and declares that his heart is on the left, but his wallet is on the right. The fact is, of course, that back in 1968 Dave Clarke, then President of Manchester Student's Union, was a moralising trendy with nothing to do except sloganise in accordance with the then fashionable dogma which insisted that Vietnam should win its war. Now that Vietnam has won and millions of Vietnamese workers are living under an obscene dictatorship (just as they would have done if America had won the war) Clarke is trotting out the latest fashionable tripe about Thatcher being good for "our" industry. The false message of the programme was that Clarke had changed in twenty years; the reality is that he was a capitalism-supporting fool then and he appears to be no better now.

The third rebel chosen for ridicule by World In Action was Tariq Ali, a r-r-r-revolutionary then and an oh-so-constitutional Labourite with his own TV programme on Channel Four now. Ali is at least consistent: in 1968 he was struggling for state capitalism in Vietnam, now we are able to see from the programme that he is struggling for state capitalism in Nicaragua.

The purpose of this programme (if TV reviewers may be so arrogant as to seek such a factor) was to show that times have changed in twenty years. For conservatives this is supposed to be a
reason for good cheer: all them lefty radicals have grown up at last, what!; for leftists it is supposed to show that the good old days of the late sixties, when you could start a demo faster than Harold Wilson could light his pipe, have gone and we are now in the miserable age of Thatcherism. Socialists accept neither view. The Left in 1968 never was a threat to the system. We do not doubt that many workers matured a little politically through the struggles of those active years but that maturity came from seeing through the illusions of futile reformism, not pursuing them. What is sad - very sad, in fact — is that students in 1988 who mouth the platitudes of pseudo-revolutionary leftism have not moved beyond the moralising confusion of 1968. Twenty years ago they were rolling joints and wasting their hopes in the political haze of reformism; today the dope costs more and it's mainly young Tories who smoke it. Apart from that, the task of changing society has still to be carried out

S. Coleman, Socialist Standard February 1988

Class War No More?

As mentioned, the Socialist Party will be holding a forum with Ian Bone in September. The following article from the Socialist Standard looked at Class War - Gray


The magazine Class War has decided to cease publication after 15 years

One of the more delicious frissons I derived from the recent death of Princess Diana was the wicked thought of what Class War magazine would have made out of it.They would have had a field day with the idiotic business, and shocked a great number of the grieving public with an extra-special dose of their puerile sick-bag humour.

But the demise of this less-than-august periodical means we will now have to make up our own sick Diana jokes, and we are the poorer for it. Of all the groups on the "Left", Class War was the most consistently outrageous and self-parodying. Any revolutionary after our own heart could find much to like about Class War, even if some of their statements could bleach the roots of your hair. Tearaways, hooligans perhaps, juvenile and even infantile at times, the Class War Federation had an energy and a freshness about it which you don't often see in print, a willingness to say the unsayable to alienate just about everyone, to flout almost every principle of taste and good manners in their unrelenting efforts to shock people into political awareness.

But now they've hauled down their pirates' flag. Class War is Dead, they proclaim. Long Live The Class War! They have decided to pack it in after 15 years, and do something else. And they are asking revolutionaries everywhere to discuss with them what that something else ought to be. In an Open Letter to the Revolutionary Movement contained in their final issue, Class War, in a fit of honesty certainly alien to the Left, offer to exchange dirty washing with all-comers in an attempt to find the way forward. There follows a sad tale of internal division and internecine squabbling which will sound familiar to many groups. And they frankly admit the "macho" female-excluding nature of their political ethos. That they are sincere cannot be doubted. Nor are they one whit diminished by these admissions but in fact appear more dignified upon their retirement than ever during their career.

Class War, it has to be said, succeeded brilliantly in appealing to a small section of the radical "market" — those who wanted action, but not the stale formulaic sloganeering of the Left. They had an effect and an influence out of all proportion to their size, making headlines and TV appearances again and again. But for every one person (young white male, as they admitted) who was attracted, fifty were put off. Mainly it was the violence. Pin-up pictures of dead coppers might make good satire, but confirmed most people's worse prejudices about the real nature of anarchists and of revolution. And it narrowed the already small band of their potential sympathisers to the point where Class War became more thuggery than thinking. And when the thinking stopped, the Federation fell apart.

Two not three

One gets no satisfaction from saying this, but in most respects Class War got it wrong from the start. They wanted a democratic moneyless society, without leaders or classes, and without state control. Furthermore they detested the elitist and authoritarian demagogues of the Left every bit as much as we do. But they made, without doubt, one crucial error in their class analysis. Instead of a two-class society — owners and workers, they had three. The middle-class to them was the "controller" section of society (around 20 percent) which actively collaborated with the top five percent, and also acted as a buffer zone between the owners and the bossed about "working class" (the bottom 75 percent). This view therefore involved a class struggle not against a tiny minority, but against a very large minority which, though some might be expected to embrace revolution, had its role as collaborator and class traitor already marked out for it.

"We were inspired by the principles of anarchism to raise the flag of direct class conflict because we know that it's the only way our class can win its freedom. To do this we have to push the middle class out of the way."

Hence the perceived necessity, indeed inevitability, of violence. Hence the dropping of paving stones off motorway bridges onto "posh cars". Hence the whole tone and thrust of the magazine. Revolution to Class War was essentially a bloody affair, with at least one quarter of the population condemned to the wrong side of a civil war: "We are in favour of mass working class violence, out in the open."

And this inverted snob dismissal of the "middle class" in turn condemned Class War, for in purposefully insulting the educated, the Guardian readers, the trendy-lefties, the road-protesters, the vegetarians and the tree-climbers, they managed to alienate the "joiners" and the "do-ers". Despite a circulation of up to 15,000, they could never persuade many of their "real working-class" readers to get involved. They were not interested in getting involved, and they bought Class War because it amused them, like Viz or Private Eye, or because it flirted with some secret desire to destroy and vandalise — few if any took it seriously. And revolutionaries need to be taken seriously if revolution is ever going to be possible.

Most jokes have a butt, a target to hit in order to get the laugh. It might be women, or men, or the Irish, or blacks, or politicians, but the victim must be there for the joke to work. Interestingly, most left-wing politics also has to have a butt, a human target, a victim, without which the argument doesn't work. Class War relied very heavily on having a palpable "enemy", against whom one could vent one's spleen and exact one's revenge, but the trouble with this is, who do you blame for the way a social system works? Our leaders? Or ourselves for following them? The rich? Or the poor for accepting their poverty? History doesn't hold individuals responsible. Capitalism as a system is the real enemy, not its come-and-go managers, nor its police, nor its teachers. If scapegoats there must be, we are all deserving. The creation of the human "enemy" in revolutionary politics is the point of departure from the Socialist Party's case for change, and the foundation and wellspring of all appeals to violence. In short, any solution which necessitates violence against individuals is probably wrong, not because of some pacifist moral imperative, but because it doesn't get rid of the problem.

Violent nonsense

In order for Class War's politics to maintain its appeal, the enemy had to be found, not in the abstract workings of a social system, but in concrete everyday realities. The owning class was too remote to be tangible, and certainly too remote to be vulnerable. So Class War dragooned the "middle class" into the role:
"Those who really run society never put a foot outside their heavily protected worlds. For most of us, our immediate enemy is the middle class: management, social workers, magistrates, teachers and all the other functionaries of capital."
Making a putative middle class into an enemy is as divisive as anything dreamed up by the owning class, and has more to do with testosterone than tactics. Violence is the steamy sex of left-wing politics, including Class War's. It is adventure, illicit excitement, danger, risk, Marx meets Millwall FC, hooligans on a mission. It is attractive, but only to some, in the same way as cave diving or bungee jumping.To most people Class War was one of three things: an affront to common decency, or an MIS plot, or a gang of kids having a lark. In no case was it a thing to get involved with.

What many groups can't stand about the Socialist Party is that we do not advocate violence and therefore cannot offer a practical programme of activity based on it. We are just not exciting enough for them, and thus we are labelled as sterile or "theoretical" (this being a term of abuse, naturally). But we are not Quakers and would countenance using violence if it was absolutely necessary to defend the democratic will of a socialist majority. We simply argue that it is quite possible, and highly desirable,for a large majority to establish socialism without bloodshed. The more violence is involved, the more likely the revolution is to fail outright, or be blown sideways into a new minority dictatorship.

The Socialist Party has consistently struggled to be heard for almost a century, and continues to struggle. Our venerable age however is no cause to be smug, and we hope that we also can learn something from Class War's commendable openness. We also have not always got it right. We also have had divisions. And we also have known stagnation. Class War tried a tack — that of attack — which didn't work. We could have told them it wouldn't. But we are not sitting too pretty either, and are not pointing any fingers. So long as there are revolutionaries out there with the energy to act and the will to think, we want to talk to them.

PADDY SHANNON. Socialist Standard October 1997

Why we are hostile

McCain or Obama? Tweedledum or Tweedledee? The event is one protracted yawn, utterly irrelevant to working class interests. You might, therefore, be surprised to learn that the Socialist Standard mentioned Senator Joe Biden a decade before (April, 1998) either of the present presidential candidates:

"A few years ago Joe Biden fancied himself as the next president of the United States but his candidature came to an abrupt end when it was discovered that he had repeated word-for-word parts of a speech by Neil Kinnock. We can assume that Biden was not penalised because he lifted someone else's words but because it was clear that anyone who thought Kinnock even said anything worth repeating must be too mad to be trusted in the White House."

But no longer! If you really want to read more about Kinnock, you can do so here. Since that article was written, the Welsh Windbag as he is otherwise known, has risen to the House of Lords. But, perhaps the most apposite piece about Baron Windbag dates from 1983 when he stood for election as leader of the Labour Party:

"..The first task of the Labour faithful was to choose a leader. Needless to say, nobody questioned whether it was necessary to have a leader. None of the followers voted to stop following. In the end, the reformist fantasies fell, appropriately enough, for a "dream ticket". The poverty of imagination which regards Kinnock and Hattersley as a dream is reminiscent of the advertisement-mums who get kicks out of seeing their son's underpants whiter than white. Of course, the Kinnock-Hattersley dream is a fantasy conspired by the pragmatists who seek to sell their policies or capitalism like soap powder, with Boy Neil supplying the soft soap. Kinnock is without doubt an indignant opponent of the injustices of the system which he wants to keep intact. He peppers his reformist rhetoric with undefined references to "socialism", but in his main speech to the conference he, like Owen of Salford, advocated no more than the tried and failed Keynesian plan for investment in British industry...."

"...They are irrelevant to our needs; they have no political answers; their sincerity is wasted and their dishonesty is grotesque. If they never again uttered another word, issued another policy statement, appointed another leader, assembled at another conference, the world could only be better off. They are all "but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of the master class, the party seeking working-class emancipation must be hostile to every other party". But we are not only hostile to them - the socialist objective for which we stand is far, far bigger than the miserable band of political relics which stands in our way."

The Conflict in the Middle East

Six years ago Kenneth Pollack, a former C.I.A. analyst, argued in his book 'The Threatening Storm' that the USA had to invade Iraq. Since then he has changed his mind and in a new work, nearly 600 pages long, he, if the reviews are to be believed, suggests a generation's worth of reforms as 'A Path Out of the the Desert'. Socialists, however, know that the reformist road leads to nowhere via death, destruction, delay, depression and disappointment. With over 100 years of experience, we say ignore the Pollacks, here's Socialist analysis (from 1958 - valid then, as now):

Another Middle East storm has developed. This time it is the Lebanon, Jordan and Iraq that occupy the centre of the stage, with Kuwait also stirring. Again oil is the mainspring of the eruptions and clashing interests. The struggles concern the rich oil lands and the routes to those areas, with other economic advantages for the privileged seeping in.

The revenues from oil are in the region of the fabulous. They are cherished by the privileged possessors, and sought after by privileged non-possessors who want a larger share of the plunder. The toilers who make these revenues possible have no share in them. They only receive the customary payment for the work they do; some of the Arab workers receive hardly enough to buy the necessities of life.

In spite of the numberless pronouncements on peace, with which we have been deluged for decades from all quarters, armed force, or the threat of it, is always the final resource when capitalist sections feel that their sources of revenue are threatened.

Reality and Hypocrisy
The present flare-up, just as the recent Suez dispute, concerns oil and the interests of the mammoth oil companies. There is no secret about this. Reports, articles, and pronouncements concentrate on this aspect.

As usual, the designs of those responsible for the moves in this turbulent quarrel are surrounded with a cloud of hypocrisy. The Western Powers claim to be concerned to defeat the pernicious intrigues of Russia; the Eastern Powers to put a limit to the imperialist designs of the West; the Middle East revolutionists to secure the freedom of oppressed nationals.

But each group of participants has internal antagonisms, and the members view each other with suspicion. They are uneasy unions in which each participant mistrusts the others and intrigues for the best vantage ground to press forward the economic interests of the privileged groups it represents. Hence they are always likely to fall apart and change sides.

It is an old oft-repeated story; littered with indecision, broken pacts, duplicity, intrigues and wars. In the final chapter the privileged always occupy the seat of power and the mass of people remain in subjection. It will be the same in the Middle East after the present turmoil has come to an end. At best the most the mass of the people there can obtain is a standard of wage slavery that is equivalent to what obtains in the so-called advanced countries.

When there is plenty to spend
When Western workers put forward wage claims recently they were fobbed off with the excuse that industry could not afford the outlay involved. Where they persisted in pressing their claims the employers entered into long and protracted negotiations. But when sectional capitalist interests are threatened thousands of miles away, then the might of the State goes into instant action, regardless of the outlay involved. The American State has transported munitions and men to the Lebanon at enormous cost, and the British State has done likewise to Jordan. This makes a mockery of the appeals to freeze wage claims in spite of rising living costs.

There is no excuse this time about helping oppressed people-Armed assistance has been sent to help tottering semi-feudal monarchies —in defence of oil interests.

When black becomes white
When the Russian Government sent troops to suppress the revolt against the Hungarian Communist Government, American and British statesmen and spokesmen could hardly find words strong enough to express their indignation at such an abominable action. But when the semi-feudal governments of Jordan and the Lebanon were threatened by revolting subjects the Western States lost no time in answering the call for help with men and munitions of war. Russia and China are now able to reciprocate the phoney righteous indignation. But then hypocrisy has always been one of the hall-marks of capitalism.

Those who only suffer
One of the tragic sides of the Middle East armed adventure is that soldiers are being sent there to risk their lives in a quarrel that does not concern them, and from which they will gain nothing, except the possibility of a grave or mutilation. In the Middle East itself masses of people are worked up to fury against the present groups that are oppressing them, but their struggles will only result in fastening other groups of oppressors on their backs in place of the present ones. They have not yet discovered the way to abolish all oppression.

U.N.O takes a back seat
Once again the futility and sham of the United Nations Organisation has been exposed. When the principal Powers deem the time has come to take armed action they treat this expensive Tower of Babel with contempt. Likewise, when the heads of State consider the issue important enough and they decide to meet their opponents in the game of political manoeuvring, the so-called united organs of peace take a back seat.

The present flare-up also throws light on the British Government's determination to hold Cyprus at any cost. It is a strategic base for action in the Middle East in defence of capitalist interests there.

Futile “hands off” processions
As usual in this country there has been an eruption of "Hands off" movements. Although these emotional demonstrations, in which dupes of the Russian Government always take a hand, have never accomplished anything, and never can, the supporters continue their bedraggled slogan-shouting processions. Instead of spending time and thought grappling with the cause of social disharmony, they waste their time and energy in useless protests.

Economic interests determine policies
In the Middle East external governments are solely concerned with the interests of their capitalist controllers and will fight against, or acquiesce in, internal changes according to their bearing on these interests. The internal States are torn with strife over which section of the privileged can occupy the seats of power and reap the harvest produced by the workers' labour. In both instances the unprivileged do 'the fighting and reap the misery of victory or defeat.

The only solution
So it will continue until those who do the work of the world realize that only when privilege in all forms, and class ownership of the means of living, have been abolished will it be possible for the people of the world to live in harmony.

When this is achieved exploitation and the hunger for profit will disappear and there will no longer be tragedies like Hungary, Suez, Iraq, Jordan and Lebanon.

EXECUTIVE COMMITTEE 29th July 1958

(Socialist Standard, September 1958)

Capitalism stinks!

The vast majority of the 'problems' in the world today rarely if ever inconvenience a small minority, wherever they live, the ruling class. They are not, of course, represented in nearly half of the world's population lacking basic toilet facilities. They can scoff at a government promoting rats as a cheaper option on the menu and afford to source their food and thus avoid eating shit. They can, by way of contrast, boast of an exclusive set of problems. Senator John McCain, for example, has difficulty rembering how many homes he owns! Workers of the world, is it not time we pulled the chain on this rotten social system?

Power Politics and Czechoslovakia

Some surprisingly valid comparsions have been made in the mainstream media between the invasion of Czechoslovakia 40 years ago today by Russia and that country's recent activity in Georgia. Ignoring such nonsense as the "fall of communism", the article in question is of interest for what one Vera Machutova, a resident of the Czech border city of Decin who woke this night in 1968 to the sound of Russian tanks rolling by, is quoted as saying. "What is similar, she said, is the clear message from Moscow that it will not accept a dramatic political shift in a country in [sic] sees as part of its sphere of influence -- what Russia calls its "near abroad."" The term sphere of influence is one of several used by Socialists when explaining what nations compete over and as one reason for war, so it is refreshing to see it employed this way in a Reuters' piece. Svante Cornell, Research Director for the Central Asia-Caucasus Institute, provides another surprise: "After almost two decades of engagement with the West, Moscow appears to have reverted to a "sphere of influence" world-view in which it tries to exert dominion over its less powerful neighbors. "The Putin doctrine has been very much about rolling back the Ukrainian and Georgian revolutions and getting back to a position of malleable, semi-authoritarian governments that the Russians are able to control," said Cornell." Doubtless neither he nor Machutova would describe themselves as Socialists, but that some aspects of their thinking appear to overlap with ours could be seen as encouraging. Indeed, it would be interesting to learn where they'd agree and disagree with the following statement published in the Socialist Standard of September 1968:

"The dictators of state capitalist Russia have sent their armies into Czechoslovakia in a bid to impose a puppet regime which will carry out their orders to crush free speech and restore rule by torture and the secret police.

For hundreds of years,as Bohemia, Moravia and Slovakia, this was part of the Austro-Hungarian empire. Austria was on the losing side in the first world war and was punished by having its empire broken up. One result was the state of Czechoslovakia, set up in October 1918. As its unwieldy name suggests this was a completely artificial "nation-state". Besides Czechs and Slovaks it contained within its boundaries sizeable minorities speaking German, Hungarian, Polish and Ruthenian, a language close to Ukranian.

A glance at the map of central Europe will straightaway show the strategic importance of Czechoslovakia. Whoever controls it has access to Russia and the Balkans. This was why Germany wanted, and got it, before the war. But Munich was not the only time that hypocritical politicians like Sir Alec Douglas Home, who now cry crocodile tears over Czechoslovakia, betrayed that State. They did it again at Yalta. This time the buyer was Russia. When the Czechoslovak and Russian rulers met at Cierna nad Tisou at the end of July they may have recalled that this was not always a frontier village. Pre-war Czechoslovakia stretched further east with the province of Ruthenia. In 1945 Russia grabbed this area, of some 4,000 square miles and a population at that time of three quarters of a million, and incorporated it into the Ukraine.

Russia may perhaps let Rumania go its own way without making too much of a fuss, but not Czechoslovakia, a dagger pointing right into Russia. No wonder the Russian rulers are worried. The Bratislava agreement confirmed that Czechoslovakia can never have an independent foreign policy. It was the artificial creation of the Great Powers and doomed always to be dominated by them, especially by one or other its great neighbours, Germany or Russia. The compromise reached at Bratislava seems to have been this: complete subordination to Russian dictates on foreign policy but some freedom in internal affairs.

Even at home the Czechoslovak rulers did not have much choice. Despite what anarchists and trotskyists believe, rulers cannot turn democratic rights on and off at will. Even ordinary press and radio commentators pointed out that the Dubcek government could not have suppressed freedom of speech even if the Russians told them to do so. As socialists have always argued: democracy is established and maintained by the working class, not a gift from our rulers. Freedom of speech is something that the Czechoslovak rulers are going to have to live with from now on, as the Russian military has found out. No doubt, in time, this wil lead to freedom of organisation. The Socialist Party of Great Britain wishes workers there every success in establishing the framework within which a genuine socialist movement can grow, namely political democracy.

The crude power politics of Russia once gain expose the myth of Socialism there. Russia is a great capitalist power and behaves like one.

The Socialist Party of Gt. Britain abhors this latest display of imperialist brutality, all the more vile as it has been committed in the name of socialism, and calls upon the workers the world over to oppose capitalism, east and west, and to unite for Socialism."

WAR IN GEORGIA

WAR IN GEORGIA

The war in Georgia seems to be over.

How it began is still not clear. The first major military action was Georgia’s bombardment of Tskhinval, but some claim that this was itself a response to escalation in the low-intensity fighting in the villages of South Ossetia that has been going on for many years. In any case, the Georgian assault on South Ossetia gave Russia a golden opportunity to pursue its own goals under cover of humanitarian intervention.

In general, both sides have excelled in hypocrisy. Russia as the protector of small peoples – after Chechnya? The United States as the champion of national sovereignty against foreign aggression – after Iraq? And yet there are always people prepared to take such guff seriously, or pretend to.

The context of the war needs to be understood at three levels:

Level 1: the struggle within Georgia for control over territory, waged by ethnically based mini-states (Georgian, Abkhaz, Osset).

Level 2: the confrontation between Georgia and Russia.

Level 3: the renewed great power confrontation between Russia and the West, especially between Russia and the U.S.

The West in its propaganda stresses Level 2, casting Russia as aggressor and Georgia as victim while obscuring its own role. Russian propaganda stresses Level 1, casting Georgians as aggressors and Abkhaz and Ossets as victims, and also Level 3, casting the U.S. and its allies as aggressors and Russia as their victim.

Only by focusing on Level 3 can we grasp what the war is really about.

The rulers of great powers often regard the areas immediately beyond their borders as their rightful “sphere of influence.” Thus, the U.S. calls Central America and the Caribbean its “backyard,” while Russia refers to other parts of the former USSR as its “near abroad.” They are especially concerned to prevent military ties between outside powers and states in their sphere of influence. Recall the Cuban missile crisis of 1962.

After a period of weakness, Russia is now reclaiming great power status and a sphere of influence. In the military field, the main goals are to prevent Georgia and Ukraine joining NATO and block the deployment of ABM systems in Poland and the Czech Republic. In addition, Russia will not allow post-Soviet states to cooperate with the U.S. in any attack on Iran.

The Russian operation has succeeded in keeping Georgia out of NATO for the foreseeable future: it has demonstrated the risks involved and several of the existing European member states are unwilling to take those risks. Another Russian goal – not yet achieved – is to oust Saakashvili, who is rightly viewed as an American client. (The “rose revolution” that brought him to power in 2003 was funded by the US government, through such agencies as the National Endowment for Democracy.)

It would be a mistake to interpret even the knee-jerk support of the American media for Georgia as indicative of unequivocal support. The US and its allies (with Israel playing a major role) did create the conditions for war by encouraging their client and by arming and training his forces. However, it appears that Saakashvili started major hostilities on his own, without seeking prior approval from Bush, who was enjoying the Olympics at the time. This evidently caused some annoyance. The US refused him the practical support on which he was counting. Like many ambitious but inexperienced politicians before him, he overplayed his hand.

We must bear in mind that the Western ruling class is deeply divided concerning policy toward Russia. Certain forces, especially in the U.S., are upset that Russia is no longer subservient to the West and regard it once more as an adversary. Other forces have a more realistic view of the shifting balance of world power, are wary of making too many enemies and fighting too many wars at once, and want to maintain a more cooperative relationship with Russia. These forces are particularly strong in West European countries that are dependent on Russian gas.

The dominant view among our masters, fortunately, is that they have no interests at stake in Georgia worth the risk of war with Russia. They have only one really important economic interest in Georgia: the pipelines connecting the Caspian oil and gas fields with Turkey’s Mediterranean coast (Baku – Ceyhan), which pass through the south of the country. Significantly, although Russia bombed many valuable assets in Georgia care was taken not to bomb these pipelines. Perhaps secret assurances were given that the pipelines would not be damaged.

The Russian rulers too have no really vital economic (as opposed to strategic) interest in Georgia. Abkhazia has long been their favorite vacation spot and still has considerable tourist potential. Western Georgia is a traditional source of tea, tobacco, walnuts and citrus fruit.

Our hearts go out to the many thousands of ordinary working people who have borne the brunt of suffering in this war, as they do in every war – cowering terrified in basements as the shells burst above them, jumping to their death from burning buildings, trudging along the roads tired, hungry and thirsty in the summer heat …

And yet we also have to say something that must sound heartless in the circumstances. The majority of these ordinary working people – of the adults among them – share responsibility for their current plight. Because it was they who demonstrated and voted for the politicians who ordered the shelling and the bombing. And most of them, it appears, are still ready to demonstrate and vote for the same politicians. Because they still believe that the location of state borders matters more, infinitely more than their own lives or the lives of their children. Because they still view as their enemy ordinary working people who happen to be of different descent and speak a different language. These delusions, for so long as they persist, guarantee that this will not be the last war.

The Cold War re-heats

The Cold War re-heats

According to Clausewitz, the oft-quoted 19th century general and military strategist, war is "the continuation of policy by other means." The recent brief – if brutal – conflict in the Caucasus is yet another example of the everyday nature of capitalism continuing by other means.

The conflict in South Ossetia and Abkhazia, which appears to have claimed thousands of lives has been a rare eruption, exposing the tectonic-like political and economic pressures shifting below the surface.

These recent events have been a wake-up call to those still deluded into thinking that the ending of the cold war (which was never an ideological battleground anyway) would mean an end to stand-offs between superpowers, with the ultimate potential for World War 3.

The Cold War has just been re-heated then: but this time round the battle-lines are clearly not drawn on grounds of some supposed ideological differences. There are no great ideological or moral issues at stake here. The protagonists (US and Russia) and their allies are simply rival capitalist economies, eager to secure strategic advantage, access to resources and regional influence.

In particular, in attempting to diversify its oil sourcing away from troublesome regions such as the Middle East, the US is relying on a new pipeline via Georgia which taps into relatively secure sources in Central Asia while avoiding Russian territory.

There are other considerations however. The failure of the centralised command economy version of capitalism as practiced by the Soviet Union till its demise almost 20 years ago did not end the cold war, it merely changed the front. As the economic and political basis for the Warsaw Pact crumbled, the regional military pact NATO (the North Atlantic Treaty Organisation) has been expanding far beyond its original "north Atlantic" scope, with the states of the former Soviet Union strategically-attractive targets of its recent recruitment drive, as it expands its sphere of influence.

Military conflict is an unavoidable consequence of the everyday conflict of property society. In capitalism all productive resources – most explicitly oil production and distribution – have to be owned and controlled by someone. Modern warfare – with all the waste, devastation and atrocities it brings in its wake – is a problem of capitalism. In contrast, in a moneyless, wageless, classless and stateless socialist society no-one will own any productive resource to the exclusion of anyone else. There will be no laws, rules or coercive forces to administer or police such monopolisation.

The World Socialist Movement is unique as a political movement in clearly and consistently expressing its opposition to war throughout the last hundred years. This is not selective: we oppose all wars, and have done so from World War 1 to Gulf War 2. Our opposition has a simple basis: war is fought over issues of interest to employers, landlords and bosses – the capitalist class, in short – while it is workers, in uniform or civilian clothing, who are the cannon-fodder. The overwhelming majority of members of the global working class – whether from Georgia (Caucasus) or Georgia (USA), have no interests at stake worth shedding a drop of blood over.

Radical Film Forum

A Season of Free Film Evenings
From Sunday 14th September to Sunday 23rd November

Radical Film Forum - 52 Clapham High Street

.Tired of mainstream films?· Bored of the blockbuster?
· Want more than just passive consumption?


Sun 14th Sep
Animal Farm

Although the theme focuses on the concept of leadership it also questions our understanding of a democratic society.

Sun 28th Sep

Who Killed the Electric Car?

Classic example of profit coming into conflict with social needs and when the product on offer clearly threatens manufacturing interests the steps taken to ensure the profit system stays in control.

Sun 12th Oct
Judgement Day: Intelligent Design on trial

This film documentary is a brilliant expose of how determined the religious fundamentalists are in undermining the scientific explanation for evolution.






Sun 26th Oct
The Corporation

Documentary film critical of the modern-day corporation and for the US judiciary to accept it "as a class of person". This production evaluates the behaviour of corporations towards society and the world at large much as a psychologist might evaluate an ordinary person.










Sun 9th Nov

Zeitgeist


Produced by Peter Joseph a documentary film on the hypothesis that Jesus is a myth; the attacks of 9/11; and the Federal Reserve Bank. This production not only examines he origins of religion but also provides remarkable insights on why it continues to be a major social influence. Is religion a natural phenomena or major conspiracy?



Sun 23rd Nov
The War on Democracy

America is fond of portraying itself as the 'saviour of democracy' when the evidence suggests otherwise. Investigative journalist John Pilger places this portrayal under the microscope.

Please note all films start at 4 p.m.

Forum

The SPGB have organised a forum with
Ian Bone (Class War)
and Howard Moss (Socialist Party)

Title: Which way the revolution - what are our differences?

Chair: Bill Martin (Socialist Party)
Followed by open discussion
Venue: 52 Clapham High St, London
Saturday 20th September at 6 pm
Refreshments available, also free literature
All welcome

For further information:
Phone 020 7622 3811
email SPGB@worldsocialism.org

Crunched credit

One victim of the credit crunch is the theory that banks can create new purchasing power which didn’t exist before, i.e., can “create” credit. While the writers of economics textbooks show mathematically how in theory the banking system as a whole could on certain unrealistic assumptions turn an initial deposit of £1 into £9 or even £99 (and while currency cranks get hold of the wrong end of the stick and that an individual bank can do this), practioners and journalists who observe them know this not to be the case. They know that banks can only lend out money that has been deposited with them or which they themselves have borrowed or their own capital.

First, a practioner, Bill Browder, chief executive of Hermitage Capital Management, a hedge fund (and, incidentally, grandson of Earl Browder, one-time General Secretary of the American Communist Party who lost his job in 1946 when Moscow zagged and he went on zigging):

“The banking system is the financial circulating circulation system. If the circulating system doesn’t work, the patient dies” (interview with the Times 4 August).

Precisely. Banks and other financial institutions involved in lending are in the business of circulating, not creating, money and capital. Ideally from a capitalist point of view, they circulate money from where it is not being used to where it can be applied the most profitably. As Browder points out, the credit crunch represents a clogging up of this circulation of money and capital which, if it continues, could have widespread repercussions on the real world of production.

Now, the financial journalist, Anatole Kaletsky of the Times:

“. . . the whole point of a bank is to exchange short-term, liquid, fixed-value liabilities for long-term, illiquid assets whose value is hard to guage - this liquidity and maturity transformation is, in fact, the main social function that a banking system provides” (14 July).

In other words, banks borrow short to lend long. Borrow ready cash (either from depositors or, these days, from short-term money markets) at one rate of interest to lend to capitalist firms in the hope of earning a higher rate of interest (it has to be added that, these days, banks also engage in speculation on currency and other markets in the hope of making a capital gain bigger than what they have to pay to their depositors and creditors).

What has happened is that their speculation with a view to a capital gain has gone horribly wrong as they put money into bonds which they themselves describe as “toxic” because not all that credit-worthy. Which now nobody wants to hold, so their price has fallen. This means that, instead of making a capital gain they have suffered capital losses, but they still have obligations to their depositors and still have to pay interest on their short-term borrowings on the money market. But because inter-banking trading has slowed down – nobody wants to be left holding a parcel of toxic bonds – the interest rate on these borrowings have gone up.

The banks are reluctant to borrow as much as before from this source. Which means they have less to lend out. Hence the credit crunch. Of course if they really could conjure up money out of nothing then could never be a credit crunch.

About Solzhenitsyn

According to the BBC today, Solzhenitsyn "opened the eyes of the world to the evils of Soviet Communism". No, try again. "He exposed the brutality of the Stalin era." Much better. By way of contrast, the Socialist Party has held the same, consistent and correct attitude towards Russia since before Aleksander Solzhenitsyn was born!

Searching our website, you could be forgiven for thinking that we have had nothing to say about this world famous author. This is not the case as at present only a only a fraction of our published material going back to our inception in 1904 is available online. The Socialist Standard of January 1972, for example, has a piece titled 'From a Russian prison camp':

"...We are not concerned here with his stature as a writer but rather with the way he adds to our sketchy knowledge of Soviet society. In 1945 he was sentenced to 8 years for comments he made about Stalin....His three novels dealing with the Soviet scene are 'One Day', 'The First Circle' and 'Cancer Ward'. Respectively they describe the world of the manual worker, the intellectual and the chronically sick.

In 'One Day' we learn how starving and frozen prisoners labour on a construction site (temperature minus 39 degrees), queue for fuel, munch their ration of dry bread and try to wangle a smoke or an easy job. As in the outside world, "you feathered your own nest as best you could". You knew that you were cheated of your rations by all who handled them. Graft was everywhere, and so were the informers. But prisoners spared their energy, needing it for survival.

In 'The First Circle', he describes an expensive top-secret research institute in Moscow where class enemies, saboteurs and other top scientists, imprisoned in the Thirties and Forties, enjoyed relative luxury. Yet the State is cruelly oppressive here too: the cruelty is of a different type, that's all. At Karaganda it was physical cruelty - hunger, cold and overwork; at Mavrino it is psychological - pressure to meet impossible deadlines successfully, dread of a transfer back to labour camps and fear for their persecuted families. As at Karaganda, and as in all parts of Russia, informers abound - the hallmark of a police state.

If you ever wondered what has happened to ordinary Russians, these books will tell you much. In the two books together, Solzhenitzyn has covered a lot: from the lowest camp drudges, the wives at home on the collectives, ex-Party members who helped collectivize the countryside at gunpoint and their wives, unable to get work without disowning their husbands, right on up through the secret service rat-race to the Minister, Abakumov, and the Immortal One himself.

Finally in 'Cancer Ward' he underlines the idea that his real subject is not a prison society but Soviet society. The whole of Russia is a sick society, all alike are sick - doctors and patients, jailers and prisoners. All Russia is a prison where every fifth man is an informer.

For all Russians, he says, life is an endless sentence without amnesty, measured by months of deprivation and humiliation. The proletarian is everywhere a prisoner of the system: we are all doing time. Some prisons are plush like Mavrino "the first circle of hell." Others are unspeakable. His explanation of the lush conditions at Mavrino applies equally to the so-called middle-class here: "It has been shown that the better sheep are fed and looked after, the higher their yeild of wool."

Solzhenitzyn earned the right to claim: "I've got an advantage no spy can make me lose: what I've been through, and seen others go through, should give me a good idea of what history is about, don't you think?"

But notwithstanding such insights, another article - 'About Solzhenitsyn' - from the April 1974 Socialist Standard reveals some serious flaws in his thinking.

"..Before weighing in with criticisms of his manifesto (Sunday Times, March 3), we must make it clear, first, that we have always opposed all forms of censorship, and secondly, that in criticising his ideas we are no way defending the Kremlinite creed, to which we have consistently expressed our hostility. But however sympathetic we may be to one who has struggled successfully and made his views heard in spite of all the Soviet censorship and suppression machine, we cannot applaud his political views.

We should like to have greeted him as a world citizen, an internationalist, not a nationalist. But his views are based on an insular patriotism and Russian Orthodox Christianity. He believes in the myth of the "national interest": indeed he bases his argument against a Russian war with China, not on the view that working-class interests are not at stake, but simply on the calculation that Russia could not win such a war and therefore it would be against Russia's "national interest"..."

By way of conclusion, his writings did not as the BBC claim help "expose and bring down the Soviet Communist system". Since the collapse of the brutally oppressive system of state capitalism in Russia, can it be said that the life of the working class there has improved dramatically? The same question can be asked about South Africa since apartheid. Another novelist, D.H. Lawrence, gave the answer when he stated "earning a wage is a prison occupation".

The War Crisis in the Middle East

The following extract from a statement published in the September 1990 Socialist Standard serves today, on the 18th anniversary of the Iraqi ruling class sending its workers to invade Kuwait, as a reminder that no war is worth the shedding one drop of our class' blood.

"..The Iraqi rulers want more oil and they also want a guaranteed bunkering and port outlets of the world. That is why they invaded Kuwait. If they gain control of enough oil and have the facilities to move and market that oil, then, they believe, they can exercise more control over prices and, thus, make greater profits. So Iraqi war aims are commercial as those of the Western powers, who want to protect the profits of their capitalists by securing for them a stable supply of low-price oil.

As with all wars, and threats of war, the conflict is about the squalid interests of the owning class in our society. The World Socialist Movement again reminds our fellow workers that we members of the working class own no productive resources except our ability to work. Britain and Ireland, like all other nations, belong to the world capitalist class and, when one nation threatens war on another, it is about the ownership and control of wealth; it is about resources, markets or areas of strategic importance - in a word, about things that concern us only in that our masters order us to kill and die for them.

We say to our fellow workers in all other lands, we have no quarrel with you. On the contrary, we appeal to workers in all lands to refuse to slaughter one another for, and at the behest of, our capitalist masters. We appeal to you to unite with us in the struggle to overthrow the system of capitalism which not only causes war but all the other social problems which our class endures throughout the world.

The Socialist Party Of Great Britain
The World Socialist Party (Ireland)

22 August 1990"

August 2008 Socialist Standard

Pages: 1 2 3 4 5 6 7 8 9 10 11 12 editorial: contents: Also available as HTML (image lite) and PDF

Pages:13 14 15 16 17 18 19 20 21 22 23 24