Socialist Party of Great Britain - Camden and North West London Branches SPGB Lectures - (9.08.86).

Held at Marchmont Community Centre, Marchmont Street, Camden, London

Lecture 2 - Profits, Riches and Poverty

I don’t think you need any explanation of the title, PROFITS, RICHES AND POVERTY, in which profits and riches are related to poverty.

You would have read recently in the Press that profits have been going up sharply in this country in recent years. You will interpret this to mean that the rich are getting richer. It is the sort of natural reaction to news about profits going up.

But before I get down to dealing with profits, riches and poverty in detail, I want to take a look back into the past century, just for a moment, to put today’s lecture into some sort of perspective.

Under slavery the slave-owners owned the slaves, and they put them to work, and the slaves produced products, worked on farms and constructed buildings. After having allocated to the slaves what were necessary for their own upkeep the balance belonged to the slave-owner, and it was consumed by him, his family, and retainers. I have no doubt that the slaves had a quite clear idea of what was going on, that in fact, to use Marx’s terms, they were being exploited.

Later on, you had Feudalism. You had what was known in this country, as the manorial system, where the outward appearance was somewhat different. Here, the serfs were not slaves they had a certain status; they had some land allocated to them by the lord of the manor. The serfs would work on their own land, for say three days a week, and work on the land of the lord of the manor for the other three days a week, for the benefit of the lord of the manor. I have no doubt that the serfs had a pretty clear idea of what was going on, that the lord of the manor and his dependants and so on, were living off the labour of the serfs.

Now under capitalism it has changed again. Under capitalism, a lot of economists say and a lot of workers believe them, that the working class is not being exploited at all. They are not slaves, and they are not serfs, and they appear to enter into a voluntary agreement with their employers, about the wages they would get for the work they put in, say a 40 hours week. A lot of economists and a lot of workers believe that what the working class sells to the employers is their forty hours labour, during a five day week, at its fair market value. This begs the question: where do the employers profits come from?

No economist has been able to adequately explain where profits come from, except for Karl Marx, who gave the real explanation. And Marx’s explanation was simply that the worker does not sell to the employer his five day, forty hours of labour. Instead, what he does sell to the employer is his mental and physical energies; his labour power.

The employer buys the worker’s mental and physical energies for a week. But it is one of the characteristics of capitalism that the worker can produce, in say 3 or 4 days of the week, the equivalent of his wages, and for the other, the rest of the week, he is giving what Marx called, unpaid labour to the employers. And it is out of this unpaid labour that the unearned income of profit, rent and interest are all derived.

So, in fact, the working class is exploited, just as the slaves and the serfs were exploited, although it takes on a somewhat different form. Now, what is an interesting question is this; you have had capitalism in this country, say, for a couple of hundred years, how much unpaid labour the workers have been giving to the employers in the past, and how much they are giving to the employers at present?

Well, on the basis of 1985 the total wages received by the 21 million workers who were in employment last year, and the total profits received by the employers direct, or through, the profits on the Nationalised Industries, it worked out at something like this; that the workers on average, were working 3 3/4 days to replace their wages, and giving 1 1/4 days unpaid labour to the employer, out of which comes the employers profits, giving a five day week.

Now, some of you, if you have read Marx, in CAPITAL about this, or read various other of his works, may wonder why, the amount of unpaid labour given by workers now to the employers is not larger than it is.

You may be surprised to learn that it works out at about 1 1/4 days, out of the five days. You will think, it ought to be much more than that. Marx certainly thought so, when he gave examples, probably given to him by his friend Engels, who worked in the textile industry. Marx gave examples which made it seem that they split it 50-50, that the worker was working half the time for himself, and half the time for his employer, so that the division of the five day week on that basis, would have been 2 1/2 work, the worker working for his wages, and 2 1/2 working, giving unpaid labour to the employer.

If, any of you remember, what Marx’s colleague, Fredrick Engels wrote in an appendix to a pamphlet called WAGE, LABOUR AND CAPITAL, Engels expressed the firm opinion that with every development of industry and invention, the amount of unpaid labour given by the worker, to the employer, would get larger and larger. Well it hasn’t got larger and larger. Marx and Engels in their forecast about the modern world have got it wrong. Now, there must be some reason why they got it wrong. In other words they understood the principle of the thing, why did their actual forecast not turn out as they expected?

There is a two fold explanation. In the first place when Marx gave examples of the exploitation of the workers he said he dealt with workers in what he called the sphere of production, that is, the workers who are actually producing social wealth. However there are other workers who are not in the sphere of production. These workers are in the sphere of what Marx called circulation, like bank clerks, insurance clerks and commercial clerks.

These workers are not producing social wealth at all. They are just, as it were, shuffling the wealth round, into the hands of the capitalists, who themselves are not in the production sphere but who still expect to make a profit out of exploiting wage labour who are producing social wealth.

Now, since Marx’s day there has been a very large increase in the number of workers in the circulating sphere, that is, of bank clerks, insurance clerks and so on. It’s been going on in recent years in spite of heavy unemployment. The number of jobs in that part of Capitalism has been increasing, so that is one explanation. These workers who are not themselves producing social wealth have still to be paid wages. And they get their wages, of course and where they get their wages is out of the profits of the capitalists in the sphere of production.

That doesn’t matter at the moment. However, there has been another change since Marx’s day. And that is the enormous increase of another group of workers who are not producing wealth; that is the bureaucracy. The purely bureaucratic workers in the civil service and local government have increased enormously and it has increased enormously in industry itself.

If you were to look back at the growth of the civil service and the growth of the local government you have a great increase over the century in non- productive workers. Of course Local Government employ building workers, transport workers and so on but the purely administrative producing part of the local government and civil service have gone up enormously.

The same thing has happened in manufacturing industry. I have got some figures here; from the government statistical office published between 1948 and 1977. Every year they publish the number of workers employed in the whole of manufacturing industry, and the amount of profit made every year in manufacturing industry, and they’ve divided the workers in manufacturing, into what they call wage earners, and a separate category for salary earners.

In the 19 years between 1948 and 1977 the number of wage earners decreased by over 500,000 and the number of salary earners in manufacturing industry went up by 870000. Now they didn’t publish details of what these additional 870000 salary earners were doing, but you can be quite certain, that most of them were carrying on purely financial work, or dealing with Pay as You Earn (P.A.Y.E), or dealing with pension funds, or filling in forms for government departments. In short, here you’ve got a development which will explain, why the amount of unpaid labour given by the whole working class has not increased in the way that Marx and Engels expected it to. And as I say on the basis of last years figures, it works out that the workers, the whole 21 million of them, spend 3 3/4 days reproducing the equivalent of their wages and salaries, and giving 1 1/4 days unpaid labour to the employer; the capitalist class.

But if you look at the same question, on the basis of the official figures of the division of the national income, they put it into three categories. First of all they have a figure which they call income from employment, that’s like wages and salaries of all the workers, but they also include employers contribution to workers pension funds, and their share of the national income last year was 63%. They have another category for profit including the profit of the nationalized industry and that worked out at 20%. There was a third group called the self-employed, they are one man businesses, farmers, doctors, lawyers and other people working on their own, numbering 2,600,000 and they receive 17% of the National Income. So you’ve got this division, wages 63%, profits 20%, self-employed 17%.

So it’s also interesting to see how large a change over the period for which there is information available. You have not got figures say, for the middle of the 19th century when British Capitalism was in its heyday, but I’m absolutely certain that in the middle of the 19th century the amount of profit, in relation to wages, was ever so much more than it is now, so that, the workers then, were in fact, giving a much larger amount of unpaid labour to their employers much on the lines of what Marx and Engels thought it would be.

There are very good reasons why that have changed, figures are available, for the years 1938 up to date, and they show this sort of picture. In 1938 the proportion of the National Income that went to wages and salaries was 61%, you see that compares with the figure I’ve given for last year when it was 64%.

But in the intervening years it rose, on some occasions, to as much as 73%, so it naturally varies from year to year. And so you have got this general tendency from 1938 to now, when it went up to 63% and in the last five or six years its been falling again from 69% to the figure last year of 64%.

Profits in the last three or four years have been rising very, very fast and I have no doubt that the figures for this year will show that the proportion going to profits will be up a bit and the proportion going to wages will be down a bit. Similar figures are available from the US from1929 right up to1982, and they show that in 1929 the American workers wages were 50%, of the total, on the whole its been gradually rising since 1929 and in 1982 it was 62% which is very close to the percentage which it represents in this country.

Today, however, I would expect the proportion in the US to turn against the workers and in favour of profit for the years since 1982 for two reasons. First in the depression a lot of the US workers have had to accept reduction of wages something that hasn’t happened in this country. And, second also US profits, also, have been rising quite sharply.

Now, that is one way of looking at the division between wages and profits, in other words looking at it, how people get their living. The workers get their living by having a job; the capitalists get their living by owning property, and receiving unearned income in the form of profits, rent and interest. And then of course, you’ve got the third group, the self-employed, who so to speak are working on the fringes and working on their own.

But there is another way of looking at the division of the National Income and that is, instead of looking at the way people get their living put workers and capitalists all together, and see what proportion of the National Income goes to the very rich, what proportion goes to the middling rich, and what proportion goes to the poor.

That has been done by various authorities from time to time and again I would say that in the middle of the 19th century the proportion going to the rich and the very rich was much larger than it has been more recently. In 1855, Karl Marx published a couple of estimates that had been made by economists in his time, they set out to discover exactly how much of the National Income went to the richest 20% of the population, and how much went to the poorest 80% of the population.

Well the two different estimates, they differed a bit, if you take the mean between the two, you will get this picture, that in the 1860s the top, the richest 20% of the population received 70% of the National Income, but the poorest 80% only got 30%.

In 1904 Chiozza Money (RICHES AND POVERTY published in 1905) made new calculations and he found that the proportion going to the richest 20% it had been 30% of the National Income but fallen. In 1865 the richest 20% had been given 70% of the National Income and in 1904 that had fallen to 53%, and in 1974 a Royal Commission set up by the Labour Government, made a new enquiry, and found that the richest 20% of the population, their share of the National Income had fallen to 43%. So looking at this from the other end, the poorest 80% of the population only got 30% in the 1860s they got 47% in 1904 and in 1974 they were getting 57%

The Royal Commission also noted this tendency in the division of the National Income towards less extreme inequality. I would again, think, that in the last two or three years, the years since 1980 that the proportion will again have been moving rather in favour of the rich, for one reason that I have given, that the profits have been rising very, very fast, and also because, in this recent depression, with a lot of unemployment, workers will have been spending what savings they had got and this will so to speak reduce the proportion of the National Income that they are in fact getting.

If you ask what is the reason why this division of the National Income has changed in favour of the workers against the capitalists there is not the slightest doubt it has been due to the growth of the trade unions. As the trade unions got larger membership, particularly in the last quarter of the 19th century, and as they became much more efficient organizations, they were able to swing the balance quite a lot against the employers, and it showed itself in the quite big rise in real wages in the last half of the 19th century.

Frederick Engels commented on it in 1892 in looking back over the fifty years, he said there had been a quite remarkable improvement in the condition of the workers in the big trade unions. Incidentally something that in the middle of the 19th century neither he nor Marx expected to occur. They had not seen what difference trade unions would make.

But it would be a mistake to think that the only contrast as it were between rich and poor is between profits and wages. I would suggest, there are far more workers now working in trade unions, who, although they may look occasionally at the enormous incomes of the property millionaires, are much more concerned at how much wage or salaries some other workers are getting. Its commonplace now for trade unions, to present their wage claims, in the form of, “we ought to get more, because somebody else is getting more”. The teachers, the agricultural workers, the railway men, the civil servants, post office workers and so on are all going in for this sort of thing.

There is a curious piece of nonsense in the minds of a lot of economists, and of nearly all the workers. And that is the belief in a fair and proper wage that every worker ought to be getting. If you ask any worker, they will say, “I’m not getting a fair and proper wage, there is a proper wage and I’m not getting it, and I deserve to get it”.

I’m quite sure that if one of the opinion polls organizations were to conduct a really massive opinion poll in this country and ask workers, do you think you are properly paid, 90% would say no, and they would say, do you think you ought to get more, 90% would say yes. And if they said, “what’s your reason for thinking you ought to get more?” 90% would say “there is a proper wage that we ought to get, and we’re not getting it. And I have said this is a piece of nonsense, and I will deal with the question of “a fair day’s work for a fair day’s wage” later.

But there is plenty of scope for workers to look at some other workers and say “I ought to get some more because he’s getting more”.

You can start with one quite firm figure; the 21 million workers who were in jobs last year. They all earned an average wage of a £155 a week. Now, averages are very useful things, but they frequently conceal much more than they reveal.

The £155 pounds a week conceals an enormous amount of information. I am not suggesting its wrong, but I’m just saying this is the nature of averages.

To start with the 21 million workers were getting an average wage of a £155 a week, but if you break it down into industrial groups you immediately find these revealing facts. If you look, for example, at male manual workers, their average wage varied from £130 in the Leather Footwear Group, up to £214 in paper, printing and publication. It is quite a big gap. You see between the two wages of £130 and £214 a difference of £84. But if you look at the women manual workers, their average was much lower than the men’s; £105 and £127 respectively for women non-manual workers in footwear and paper, printing and publication. So you see how this range is already wide. But then if you look inside each group of workers you will find in every group, whatever the average wage maybe some workers getting relatively high pay and some getting low pay.

Let us begin with the paper, printing and publishing group. Their average was £214, but they included those printers, the people who have now lost their jobs to Mr Murdoch, who were working in Fleet Street. These workers came out and made the statement themselves that they were getting £455 a week. Most of them have now unfortunately lost their jobs.

But you see that the average for the whole group is £214 with some workers getting over £400 a week. Take the transport industry. The average pay for transport drivers last year was £173 a week. And an agreement has just been reached between the tanker drivers, employed by Mobil Oil, and the Transport and General Workers Union to get a guaranteed wage of £18,000 a year, which is £345 a week.

Incidentally, when they were asked what they thought about the award, was it rather high, they said no, they thought it was quite a reasonable amount, enough for people to live on, but, of course, other people live on £105 and less. However to get this £345 a week they have got to work ten hours overtime and they have also to give up their free Saturday’s and do shift work and various things like this.

The Department of Employment, asked about it, said, that there are 2 million workers getting more than £345 a week. Now, if you start looking at the bottom of the scale, the low paid unit every month or so, publishes results of enquiries they’ve made about the number of workers getting paid at the legal minimum. Of course a lot of workers aren’t getting it. The low paid unit recently found that some domestic workers in the clothing trade working for less than £50 a week, which, of course, is far, much below the minimum wage.

So what in fact you’ve got, is although the average for the 21 million workers last year getting on average £155 a week conceals a range from under £50 a week, to over £500 pounds a week,. So this explains, why, of course, so many workers are looking at some other worker, and saying, “You know, look he gets more, we ought to get it”.

I said that this idea of “fair wages” is a piece of nonsense and I’ll add to it. If there were such a thing as a proper wage, a fair wage, the capitalist class wouldn’t be interested in it. All there are concerned with is to pay a wage as low as they can get away with, while of course, the worker looks at it the other way around, the worker is trying to get as much as he can. And that’s all there is to it.

What the worker is entitled to is, what he gets, and what he gets, is, what he’s entitled to. Capitalism has no morality or ethics about that sort of thing. But there have been some woolly minded people including Proudhon, Lenin, Bernard Shaw, Lady Wootton, and others who have supported the idea that everybody should have the same wage.

Attlee, before he became Prime Minister in the 1945 Labour Government, gave a thorough undertaking, that, when the Labour Party came to power they would abolish riches and poverty altogether. He used the phrase “there will be no more rich living in mansions, no more poor living in cottages”, everybody would be on the same level In short, he also, was really saying like Lenin and Bernard Shaw that everybody ought to have the same wage. Karl Marx really killed the idea a hundred years ago; capitalism can’t be run that way.

About Bernard Shaw I rather suspect that when Bernard Shaw said, everybody ought to have the same wage; he didn’t really mean that it was to include Bernard Shaw. Some years ago the National Union of Glass got out a recruiting pamphlet and they asked Bernard Shaw if he would write an introduction to it and it was a very good introduction, Bernard Shaw gave the NUG a very good reason why they should get together in a union to put up their wages but with characteristic Bernard Shaw flourished, in the last sentence he said, “I don’t belong to a trade union, I have no intention of belonging to a trade union, but then I’m a genius, but of course, you are not

But Shaw was a very wealthy man and in the two years before he died he was repeatedly writing letters to THE TIMES complaining bitterly, how he was being robbed and impoverished by high taxation, so I don’t think Shaw ever really intended that equal pay for everyone, meant him.

Marx, of course, called the idea of “a fair wage” a reactionary doctrine. He said it is customary for the trade unions, then, as it is now, to have on their banners, “A Fair day’s pay for a fair days work“. Karl Marx said, there isn’t such a thing as a “fair day’s pay”. Instead he urged the working class to abolish the wages system (WAGES, PRICE AND PROFIT)

Now having dealt with the ownership, the way the national average income is divided I now come to the question of the ownership wealth. The Royal Commission on Wealth and Income, in their report, dealing with the year 1974, found that the top 1% of the adult population owns 25% of accumulated wealth, the top 5% own 50% of accumulated wealth, and the bottom 80% owned only 14.5%.

And if you want to have those percentages translated into some sort of figure, 1% of the adult population would be about 350,000 people, about the size of the city of Coventry, or to come to London, its about the population of the London borough of Wandsworth.

So the picture it gave, was, the number of people who live in Coventry or Wandsworth, the 350000, own, a quarter of the accumulated wealth of this country. Accumulated wealth by the way was at that time £216,000 million. Prices have gone up since then. Probably it is now about three or four times as much.

So when they said, 350,000 adults own 25% of accumulated wealth, The Royal Commissioners were saying, that in 1974 these 350000 people, own, on average, £154000 of accumulated wealth.

The Royal Commission also found, that there had been considerable movement towards less inequality. That is to say, the top 1%, 5%, and 20% of the population had tended to see their share decline somewhat and, instead, the share of the poorest 80% had inclined to go up some what.

In the depression of the last two years; there has been an increase in the amount of wealth. Little was owned by the poorest 80% of the population. What the Royal Commission and other economists have done in relation to accumulated wealth is to try to find out what is the current value or price, of land and houses, as shares in companies, as cash, bank deposits, jewelry, works of art, motor cars, yachts, furniture and all the rest of it and add them all together and then find out from Inland Revenue figures, and from amounts left in peoples wills, and things like this, housing, holidays, is divided throughout the entire population

You may remember what Marx said about the economists He paid tribute to the genuine students like Adam Smith and Ricardo because they were followed by what he called the vulgar economists who weren’t genuine students at all but were merely apologists for Capitalism. Well these people are still with us and they popped up again in this question of the ownership of wealth.

What these economists have suggested to the Royal Commission is that the poor have wealth which they don’t realize. They say that if, for example if an old age pensioner was getting £3,000 a year it really represents a large capital sum say £30, 000 of wealth and should be treated accordingly. Now what they are saying is if a man who owns £30,000 is getting an income of £3000 on it, and an old age pensioner is getting £3,000 then the old age pensioner really owns thirty thousand pounds in accumulated wealth. Of course this is a piece of complete nonsense.

Just one thing; if you own £30,000 pounds you can dispose of it and when you die the £30,000 pounds is still there and you can leave it to your heirs. When an old age pensioner dies they have nothing whatever to leave. They haven’t got £30,000. It is a piece of crooked work by these corrupted economists, doing what Marx said they were doing, setting up false statistics as apologists for the Capitalist system.

I now want to look at why the poor, are poor, and the newness of supposed cures for poverty being offered, from time to time, both under capitalism and even before capitalism, but also, I want here, to take a glance back at more distant history. In all class-divided societies there have always been rich and poor and there have always been political and religious leaders and laterally paid economists, willing to explain, why the poor was poor and the reasons generally for this. And also giving advice to the rich as to how they should behave to the poor.

I’ve no doubt all of you bible students will be familiar with the Book of Deuteronomy. I will give you a quote from Deuteronomy (15; 11) “The poor shall never cease out of the land…” In other words you’ll always have the poor with you.

And from the gospel of John, Chapter 12:8 I quote, “To the poor always yea have with you.” Now, both the Old Testament and the New Testament also urge the rich that they ought to be kind, and charitable towards the poor. Deuteronomy had this, “Therefore I command thee, saying, Thou shall open thine hand wide unto… to thy poor.” That kind of preaching, of course still goes on. And the rich are still urged by the government and the church leaders and everybody else, to open their hand wide to the poor, at least, not to wide, but to open it anyway.

But also, you can find in the bible many sorts of explanations as to why the poor are poor. Go back to Luke’s gospel, Chapter 15:13. You all remember the parable of the prodigal son who left home and who was given a lot of money by his father who was very, very rich. He fell into destitution because he “Wasted all his substance with riotous living”.

Now, in the 19th century, there was endless literature from people like Samuel Smiles and others, warning the working class, against riotous living, urging them to work hard, with keenness and thrift, and if they did they would become rich, like the people who were written up in Samuel Smiles books.

And of course the religious and political leaders claim that the poor were poor because they were lazy. If they gave up gin swigging and gambling, and saved their money they also could prosper. In the modern version of course, their take drugs and spend all their time and money at the betting shop, and waste their money on liquor and cigarettes and things like that.

About the workers not being thrifty, it was an economist W. Ashley who was economic adviser to the Tory Party who gave the very good answer to it. He said that it was a subject for mirth, to compare the rich whose incomes were so large that they can’t help saving, with the poor, who a lot of them hadn’t got enough to live on let alone to save any money. And he said you know that it was disgraceful for economists to drum up this sort of argument for which there was no basis whatever.

And then you had Lloyd George, who speaking in 1911 said this:

Today you have greater poverty in the aggregate in the land than you have ever had, you have a questionable heap by the strong, and you have a more sever economic bondage than you probably ever had”.

And he went on to say:

For grinding labour today does not always guarantee customs or security”.

This is an understatement, but he was emphasizing the point against the Samuel Smiles and religious leaders who said that to the workers, that if you work hard everything will be alright. Well, Lloyd George was saying this isn’t true you can work as hard as you like and you may find yourself in 1911 one of the million unemployed or one of the other millions of paupers and destitute. And workers were also not prepared to admit that it was their fault by living in workhouses or having to go to the parish for assistance. The truth is of course that under capitalism, the poor are poor because they are exploited and under capitalism poverty is not going to be abolished, it can’t be.

I said that the rich are still prepared to be charitable, in relief of the poor, but to paraphrase Tolstoy: the rich will do everything for the poor accept get of their backs (see WRITINGS ON CIVIL DISOBEDIENCE AND NON VIOLENCE). And this sums the thing up, completely. But of course social reformers have offered the working class the cure for poverty in thrift and hard work. They tell the workers work hard and save; be thrifty and so on. They set a moral tone by telling workers don’t go into gambling or riotous living.

And you also had the social reformers like Lloyd George introducing Old Age Pensions and insurance for the unemployed as an attempt to prevent poverty. Lloyd George’s social reforms were going to abolish at least some of the poverty that then existed, and this came to perfection in the Beverage report on the Welfare State and Health Service introduced by the Labour Government in 1946.

We also had Attlee, as I said, before he became Prime Minister, promising to abolish riches and poverty all together and have everything on an equal level. Later on, you had the Labour Party when it came into office, saying that when they Nationalized all the industries, the coal the mines, the railways, the Bank of England, and so on would would abolish poverty because they said the Nationalized Industries will pay higher wages than private firms do so all the workers will be better off. Of course it was the Labour Government which introduced the wage freeze in 1949 to prevent the workers from getting higher wages that they had been promised.

Another thing social reformers claimed to help cure poverty was the construction of Council houses. They were going to build cheap, satisfactory low-rented houses, so that would relieve the workers of some of their expenditure and make them better off. In fact, there are tens of thousands of people in council houses who are so completely destitute that they can’t pay rent at all, and the council knows it, and they can’t even make a serious attempt to collect it from them.

And then, of course, all the three main political parties discovered the cure for poverty, in the old Keynesian rubbish. The economist J. M. Keynes was going to guarantee that there would never be any more depressions and that unemployment would disappear. Now thirty or forty years later, there are 2,500,000 million unemployed workers many whom have been out of work for years. The latest theme for curing poverty is one by the Tory Government, what Mrs. Thatcher calls “People’s Capitalism”, that is, in urging workers to put their savings into company’s shares instead of putting them into savings banks, or Post Office banks.

A Labour MP, a Mr Meacher, the Shadow Secretary for Social Affairs made a speech in which he accused the Government of trying to suppress the fact that, the poor numbered 10. 5 million.

Well, Lloyd George never said that they numbered ten and a half million in 1911, and the Labour Party didn’t say they numbered ten and a half million in 1946, but Mr Meacher went on to say: “Poverty in Britain is now at its worst since the war, and comparable with that of the 1930’s. To which the writer in The Times, made this very pertinent comment:

These ten million, if ten million there be, exists after forty years of the Welfare Stat. Now, if Mr Meachers’ party really introduced the so-called Welfare State and says this abolished poverty, how comes the Home Shadow Secretary forty years afterwards, says poverty is worse than ever after the Labour Government had abolished it.”

Another, scheme for helping the poor to prosper, is now being considered, by the Government what they call profit related wages, there have always been some firms, which have offered profit sharing schemes to their workers. This new one differs from the old one in various respects, because, if the new scheme is put into operation, it’s only at the stage of being considered at present, the government will pay a hundred and fifty million to the workers, who in joining in the new scheme, by reducing the amount of P.A.Y.E. that they pay.

But take the old profit sharing schemes first. An employer will come to the workers and say look I’m prepared to give you a share in profits, and he will have to offer it in the following form; “whatever your wages are at present, I’m going to give you a share in profits which will be on top of your wages”.

Employers do not give away part of their profits for any purpose. What they are hoping to get out of it, and they’ve made no secret of it, is by giving the workers a share in profits they would increase what the employers call the workers’ loyalty to the company. In other words, the workers will think more about the company’s affairs, and its prosperity, than about his wages, that is, the workers will work harder and be less inclined to strike, in which case, of course, the companies profits will increase, and if they did increase, it would have been a good business for the company.

If of course it didn’t work and if the workers weren’t satisfied with it, and were not in the employers words more loyal to the company, and didn’t work harder, and still went on strike, the employers would drop the scheme, as a lot of them did, because, they found it wasn’t worth while.

Now in the new scheme, what will happen is this, the government will invite companies to go to their workers and say, look instead of your having a wage in future you will have either 5% of profits as a percentage of your wage, it will not be a normal wage, it will depend on the amount of profit, the company makes.

So, for example, suppose the workers were getting two hundred pounds a week, the employers would say, you keep a hundred and ninety pounds, and the rest of it will, at present ten pounds, will depend on profits, so it may go up, say to twenty pounds or it might disappear. They will tell workers that in future your wages will not be fixed, without any relation to how the companies doing. The scheme called flexible wages they say will mean that when the firms doing well, wages will go up, when the firms doing badly wages will go down. Well workers don’t behave like this. Normally workers and their unions have no interest in how badly the firms are doing. They say you don’t cut our wages; they do their best to prevent wages being reduced.

The Government’s Green Paper, on this new scheme, says that it will lead to an improvement, in efficiency, and productivity, leading to enhance competitiveness, and better business performance. The hope is that the workers will work harder, their productivity will rise, and the company will be able to reduce its prices, will get a larger share of the market, and make larger profits.

The advantage to the workers, the government says, is that the government will relieve the workers of a quarter of the income tax that they would have to pay on their share of the profits. In a given year, say, workers got six hundred pounds under the profit related part of their wages, whatever the P.A.Y.E might be on that six hundred, it means the workers only have to pay on three-quarters of it, and the government would pay the other quarter.

But, like the old scheme and the new one, they will mean that the workers will work harder, the workers output will be greater and their productivity would be greater. Say that, the number of workers required, to produce a certain given quantity of products will be reduced, if the workers work 10% harder, then instead of a hundred workers, the firm would be able to carry on with ninety.

Now, the government put this new scheme forward, on the basis, they say, that it will eat into unemployment, it would increase the number of jobs. Well, you look at this; should you have a firm that has a profit sharing scheme, invested to get the workers to work harder, and it does expand, it will be expanding at the expense of the less competitive firms. So one firm employs more workers while other firms employ fewer, it doesn’t make any difference, whatever, to the amount of unemployment.

My own guess is, if this scheme actually comes into operation, and a lot of workers will have to agree with the set-up of such schemes, as long as profits go on rising, the workers won’t mind very much. But as soon as profits start falling, I’ve not the slightest doubt; the workers will carry-on in their traditional way. They will say scrap the scheme we’re not going to accept lower wages, in fact, we’re in it for what we’ve got.

Just a word on what Thatcher calls “the share-owning democracy”. This business of buying shares in British Telecom and other companies, what little the workers can afford to spend on such shares is very, very small. In other words, it will never give workers control of companies, their small share holdings won’t count against the huge share holdings of the wealthy people who control the companies.

And I would simply add, shares not only go up, but they can come down As you have seen share prices have come down in the last fortnight, and I think its quite sufficient to say, that speculating on the stock exchange, is a good business for people who have inside knowledge and plenty of money to spare, but its not a game for small share-holders, that won’t lead them anywhere, and they won’t get anything out of it.

Having said that riches and poverty have existed as long as class society, you’re entitled to ask, why does The Socialist Party of Great Britain say, that poverty will be abolished with the establishment of socialist society.

Well to start with, in Socialist society, there will be no wages, no profits, no rent, no interest, in short, there will be no money income. There will be no people having unearned incomes from rent, interest and profit, because they will not own property. There will be no buying and selling, therefore no money system, and no price system. As nobody will have any money income, it will not be possible for anybody to be richer or poorer than anybody else. And remember the basis of socialist society will be that people will have free access.

You are entitled to say how can you have free access? Where will the goods and services come from, into existence, so that the population can have free access to them, the food, clothing, shelter and all the rest of their requirements? Well, the whole of the population will get them by taking them out of the communal store.

And how will they get there? They will get there because members of society will cooperate together to produce them. And as I say, emphasis will be on the basis of free access. People will take what they need and they will not have either pay for them, or give anything else in return for them.

However, this is not an easy task. Far from it. To set up conditions of free access will be the greatest problem for socialist society will have to face.

Karl Marx wrote long ago, that the first task of a socialist society, will be to increase production, as much, and as quickly as possible, and it is still true as Marx, as it was when Marx said it.

When, the preliminary necessary work has been done, and when a socialist working class takes over, the machinery of government and the armed forces and starts setting about establishing socialist society, their first task will be, to increase enormously, and as fast as they can, the useful goods and services that society will need.

Now some people have fallen into the elementary error that under capitalism, enough is already produced, for socialist society to operate.

It’s a dangerous illusion, based upon a complete misconception of capitalism. These people look around them, and they see, from time to time, that different capitalist industries produce more, produce an un-saleable surplus. They produce too many ships, and can’t sell them; they produce too much coal and can’t sell them.

When the miners strike started a year ago, the Coal Board said there is fifty million tons of coal lying around the country, which normally would take the coal industry ten years to get rid of it.

You’re all familiar with the talk about mountains of grain and various other commodities like wine and butter that have been produced both in the US, and in the European Economic Community. This is something that happens in different parts of industry, but, as far as the capitalists are concerned it never happens intentionally.

Capitalists never allow the workers to produce in their industry more than they think they can sell at a profit, and if they do produce more than they can sell at a profit it’s a miscalculation, as far as the capitalist class is concerned.

Fredrick Engels, Marx’s colleague put it very well, he said: “too little is produced, that is the cause of the whole thing… But why is too little produced? Not because of the limits of production…. The limits of production are determined, not by the number of empty bellies, but by the number of persons able to buy and to pay” (Letter to F.A. Lange, SELECTED CORRESPONDENCE OF MARX AND ENGELS, page 199).

That is what the capitalists are allowing production to go on for; they are allowing the workers to produce in every industry, the amount the employers think they can sell at a profit, that is, to the people who can purchase and are able and willing to pay.

But Marx added to this. Capitalism never has produced, enough, to meet decently and humanly, the needs of the mass of the population. It is still just as true as when Marx said it. I have said that capitalist industry never intentionally produces more than it can sell at a profit, if inadvertently it does; it finds it does, it immediately cuts down production, and it doesn’t go on producing things that it can’t hope to sell.

But there is, one exception. Capitalists cannot see in advance what will be the outcome of their agricultural activities, they never know whether, for natural reasons, that next years crop will be a total failure, or will be a bumper crop. If they get bumper crops, two or three years running they will in any event run into this difficulty where they’ve got an un-saleable surplus, and, in time, of course, these un-saleable surpluses get looked after because the farmers go bankrupt, but it may take quite a time for the farmers to go bankrupt.

But there is a general exception to all of this, and that is, that government, for political, or military reasons, or for both, literally, pay, different industries to produce more than they can sell at a profit.

In 1915 for example, under the Corn Production Act, the Government said to the farmers, in this country, you can produce absolutely as much as you like, we will guarantee your profits of everything that you can produce, we will subsidize your production, and they attached one condition to it, they said to the farmers, you will also have to pay a minimum wage to agricultural workers because we want to attract workers out of other industries into agriculture, because the country is desperately short of food.

Let’s carry on to 1921 when the war was over. The Government abolished the Corn Production Act, took away the subsidies from the farmers, and for several years they let agriculture, so to speak, stews in its own juice. But governments do this sort of thing. In the US, and Europe, this country and others; for example; governments stockpiles warehouses with strategic materials. There in access of what the capitalists could sell at a profit, but this meets the political and military needs of capitalism.

The first task of socialist society will be, as Marx said, to produce more as rapidly as possible. Socialism will not be fully functioning until it is able to offer free access, that is, until socialist society is able to offer to all persons all they reasonably need to live worthwhile lives.

In other words, everywhere in the world where people live, there shall be available, all the requirements of civilized living, in sufficient quantities, enough good food, clothing and shelter, water and sewage systems, means of transport and communications, hospitals, education services, libraries, newspapers, books, entertainment facilities and so on. Marx had this in mind when he said that socialist society will meet peoples’ needs decently and humanely.

To suggest that this level of production already exist all over the capitalist world is pure fantasy, divorced from all reality. It is a very dangerous policy. The level of production to meet the needs of people does not exist in the industrialized countries, let alone in the rest of the world. So Socialism’s first task, when the socialists have got power, will be to increase the production of useful goods and services as quickly, and in as large a quantity as possible.

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Object and Declaration of Principles


The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.