Socialist Party of Great Britain - Camden and North West London Branches SPGB Lectures - (28.11.1987).

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

Mrs. Thatcher’s Popular Capitalism

The idea behind what is now called Popular Capitalism is quite simple. Mrs. Thatcher says that it is in the workers’ own interests to agree to have part of their wages based on how much profit the company makes.

Thatcher also says, workers should save money out of their wages, that they should own the house they live in, buy company shares that’s including shares of the company they work for or any other and lastly, that they should be encouraged to set-up their own businesses.

The Tories claim that they are the only political party which is able to give the workers these benefits and some people have claimed that “Popular Capitalism” is an invention by Mrs. Thatcher herself. Both claims are untrue.

Under different names the Tories have long had a programme of “Popular Capitalism”.

Forty-two years ago the Tories invented the phrase “Property Owning Democracy”, and now it’s been changed to “Popular Capitalism”.

And it isn’t only the Tory Party that has tried to make capitalism acceptable to the workers.

After all, the essential features of capitalism have not changed since it emerged from Feudalism and you will find that these ideas arose quite early in the capitalist system and for the same reason that they do now.

But go back a little while. First go back forty years after they replaced the Labour Party in 1951 and you had the Tories version of “Popular Capitalism”, in the form of a “Property Owning Democracy”.

The Labour party had come to power in 1945 on their version of “popular capitalism”. They called it Nationalisation.

Go back twenty or thirty years earlier to 1911. Then, Lloyd George tried to revitalise the Liberal Party with its radical ideas unemployment schemes and old age-pensions.

Go back, still earlier, and you will find that all the political parties have tried social reforms at some time or other in an attempt to wipe out the ugly face of capitalism.

In 1944 all the main political parties, Liberal, Tories and Labour, who were all in the war time National government, all agreed with another version of “popular capitalism”. They called it the Welfare State, they all agreed on this reform.

There is one thing, though, that Mrs. Thatcher can be given credit for, although she didn’t invent this idea of Popular Capitalism. She has done one thing which sets her out from other Tories and politicians generally.

If you think back for about fifty years in this country, though not in America, all the Liberal, Labour and Tory politicians have fought shy of naming capitalism as the system they defended. Of course, the Labour Party had its version of “popular capitalism” when they were in office, but they misleadingly called it “Socialism”.

But the Tories and the Liberals also found other names for capitalism; they called it Free Enterprise, Private Enterprise, “the Public Sector and the Private Sector”, “the Market Economy”, “the Western Way of Life” and lots of other things like this but not so Mrs. Thatcher.

Mrs. Thatcher brought the word capitalism back into use. She believes in capitalism and she doesn’t mind saying so.

And there is something more you want to notice about Mrs. Thatcher.

Never to my knowledge has Mrs. Thatcher done what the Labour Party, the Liberals and most of the Tories did. And, that is subscribed to the erroneous economic doctrine known as Keynesianism brought into the political field by the economist J. M. Keynes.

It wasn’t Mrs. Thatcher who said to the Tory Party that it was a Party of Disraeli and Keynes, it was Peter Walker one of her dissident members of her cabinet.

Mrs. Thatcher has never committed herself to the Keynesian clap-trap and she’s repeatedly made it clear that she’s quite out of sympathy with the economic policies of the old traditional Tories; Baldwin, Churchill, McMillan and Heath.

She’s got quite different ideas.

She’s the leader of the Tory Party but so far as her economic policy is concerned, she is a dedicated follower of Adam Smith a believer in competitive free trade, “laissez faire” capitalism, like the old Liberal Party itself was in the middle of the nineteenth century.

Just one point I’ll touch on here. I’ll come back to it later.

A number of people are afraid that Popular Capitalism will be so successful that it will really alter the political scene to the detriment of the workers and the development of Socialism.

They are afraid that Thatcher will go on pushing this idea, that all the workers will accept popular capitalism, it will weaken the trade unions and harm the case for Socialism.

There is no need to worry. All of these previous ideas of popular capitalism have had their day and disappeared as this version will. Thatcher’s popular capitalism will fail just as it happened to all the others.

I’ve already said these ideas are as old as capitalism itself. I’ll give you a few dates and you’ll appreciate how old they really are.

Take savings. Already in 1829 there were already five hundred savings banks in this country and the workers were subjected to a steady stream of propaganda from the politicians, the economists, the churches, urging them not to waste their wages in the ale houses and gin shops but instead to save their money.

So savings was right on the agenda at the early days of capitalism.

Then, take profit-sharing.

Now a lot of people think profit-sharing is a very new idea. However, the first known profit-sharing scheme set out in this country was in 1829 and I mean 1829, not 1929.

Take another of the Thatcher ideas, home-ownership.

The first building society was set up in this country in 1775, just the year before Adam Smith published his “WEALTH OF NATIONS”.

They were not at that time the same sort of building societies that exist now. A number of people would get together, put up the money and build houses simply for the members who had subscribed.

Later on building societies developed with joint-stock companies and took on funds from elsewhere. But that was the date when they building societies first appeared; 1775.

And in the 1830s it was reported there was quite a little boom in building societies particularly in Yorkshire for some reason or other. I suppose it was the activities of the woolen trade.

For the workers using their savings to buy companies shares didn’t come till later but it was quite well known at the end of the nineteenth century.

There is however, one difference between these modern ideas about saving and the idea put over in the early days of capitalism, In 1829, the propaganda told to the workers was save your money in the 500 or so saving banks and don’t waste it on the demon drink. They were also told to put their savings only in a savings bank and don’t on any account risk savings by going into speculative adventures. The Politicians and economists have now changed their tune. The government in particular, are telling the workers to put their savings in buying shares like the, British Petroleum and British Telecom and so on which everybody knows is a highly risky venture

And there is, of course another difference. The people who were telling the workers to be thrifty 150 years ago would have be shocked at the idea of there being premium bonds, which is a form of speculation, which is, of course is now quite accepted.

I’m now going to give you one or two quotations to show how long ago Thatcher’s ideas were being put to the workers. Take the Thatcher enthusiasm for the workers setting up small businesses. I quote:

When there is a glut of labour go at once out of the market become yourselves capitalists”.

This quotation comes from 1831.

The authors of this quotation used this example:

If an unmarried man saves three shillings a week for nine years he would then have enough money to live on quite comfortably for a year

Presumably if the unmarried man was out of work it wouldn’t matter, and he would have a year in which he could either go looking around for a job somewhere else in some other industry or, as they recommended, he could get together with a few other workers and set up a little business of his own.

Here is another quotation on the same subject:

The workers will have saved some money placed in some new line of labour or resolved to do what is capital and labour and do together as a workman on his own account

By the way that also has got a slightly modern meaning. The unemployed have been told by Mr Tebbit to “get on their bikes” and look for work rather than sitting around unemployed. In the 1830’s workers did not have bicycles but the idea is exactly the same.

Then, of course, there are all the warnings that you’re familiar with today. And that is politicians telling workers not to strike and push up wages to far. I quote again from the book:

When there is too much labour in the market and wages are too low, do not combine to raise the wages, do not combine with the vain hope of compelling the employer to pay more for labour than there are sums for the maintenance of labour

And, of course, there is Thatcher’s insistence when she came into power in 1979-and incidentally it was Tory policy- that they will not adopt an incomes policy and they would leave wages all to the market forces. Well hear this quote from 1831:
Leave the relations between wages and labour to equalise themselves,”

In other words it’s Thatcher speaking but a couple of centuries earlier.

Now all of those quotations that I’ve given are from this little book called “THE WORKING-MANS COMPANION”. It contains quite an interesting essay on the results of machinery and how the workers should regard the introduction of machinery and it was published by the Society for the Diffusion of Useful Knowledge. An edition was published in the US.

The society was not an entirely employers organization. If you look down the membership you’ll see, a lot of clergymen, a lot of economists, a number of politicians, but also, some social reformers, and incidentally, I noticed looking down this list, one name you’ll recognize; Roland Hill, the man who introduced the Penny Post. Another name was Leonard Horner.

Those of you who have read their Marx on Factories Acts will remember Marx giving high praise to Leonard Horner for the determined way he chased after employers who neglected to install safety devices in their factories and therefore risked the life and limb of the workers.

On the question of machinery, this little booklet urged the workers to welcome machinery and not resist it. And the argument they used was this; if you bring in machinery it will reduce costs of production and the factory owners will therefore be able to sell their goods more cheaply. And if they sell their goods more cheaply more British goods will be bought and the more British goods that will be bought the more jobs there will be for the employed and unemployment will be correspondingly reduced.

You’ve only got to change one word in that and you’ll see that this is Thatcher speaking again. Take out the word machinery, and call it high technology. She has made speeches saying to workers don’t resist high technology it’s the way to prosperity for Britain.

The idea of the Society for the Diffusion of Useful Knowledge’s belief that there is only a limited amount available for wages was an interesting but erroneous one. It was Ricardo’s so-called wages fund theory highly crtiticised by Marx in WAGES, PRICE AND PROFIT and CAPITAL.

Ricardo argued like this; he says the capitalist can only pay wages out of the capital they’ve already accumulated, therefore it is a limited amount, therefore the more workers it has to be divided over, the fewer, the smaller the amount each worker will get. In other words if the wages fund will employ a million workers and there are two million dead jobs their wages will be cut in half. Therefore, arising out of this Ricardo said the way to raise wages is for the workers to limit the size of their families and this little book is full of such advice.

The author says to the workers cut down the size of your family and then wages will go up and that the only other way to raise wages is to welcome the machinery or high technology, as it is called now. This will increase the total amount left to produce and if the total amount produced is increased there will be more available, both for the capitalist, and the workers.

That’s the sort of argument that they advocated. Now, this little book by the way was priced at one shilling and sixpence then, which is about half a days pay of a skilled craftsman so it was not out of the reach of the workers although in fact, it had quite a large sale.

Now, I’m not suggesting that Mrs. Thatcher’s has read this book. I don’t suppose for a moment that she has, but I am reasonably certain, that she’s read the works of Samuel Smiles.

Now I don’t know how many of you know the name Samuel Smiles. He was probably the best know man in this country in the 19th century and he exerted an enormous influence, although he’s now forgotten. He had business experience and as a politician he knew something about economics and he was what would be called a forward looking capitalist. Long before the government introduced free education he was campaigning for this social reform, not to benefit workers, but the quality of workers coming onto the labour market.

Smiles said capitalism needed an educated working class. He also campaigned for local authorities to open public libraries so that the workers after their hard days work could get down and study and improve their skills and all the rest of it.

If I may use some of the books he wrote you’ll recognise the assiduousness of Mrs. Thatcher. One of them was called “THRIFT”. He wanted to help workers to save their money. And another was called “SELF-HELP”, with illustrations of character and conduct.

Now, Thatcher, in the last few weeks has used this phrase “self-help” and I’m quite sure where she got it from. She got it from Samuel Smiles and that particular work sold a million and a quarter copies which is an enormous amount for the nineteenth century.

Another book he wrote was “WORKERS EARNINGS, STRIKES AND SAVINGS” in which the theory was the same ideas put forward in “THE WORKINGMANS COMPANION” warning the workers against striking. And probably his most famous book was called,”LIVES OF THE ENGINEERS”.

In the book he published biographies of the well known engineers of the day; people, like Stevenson, Brunel, Arkwright and all the rest of them. They were quite good biographies, but all the books had an accompanying theme in which he would stress the fact, that all these noted engineers had got to the top of the tree, they were people who had worked very hard, studied, lived serious lives and all the rest of it. The moral of the book was to convince the worker that by hard work he could become as famous as Stevenson. As I say Smiles was quite well known for this and the books had quite a wide circulation. One thing that may have occurred to some of you, and that was the fact that wages were very, very much lower in 1831 than they are now and you may wonder how any workers could save.

Well this is exactly the same as it is now.

In 1831 the agricultural workers wage was six shillings a week. Incidentally you may recall the “COMPANION” suggests that an unmarried worker could save three shillings a week, and if an agricultural worker, it would be half his wages, for a period of nine years.

It is obvious the worker couldn’t do it, but they were at the bottom of the tree. Up the tree you got some workers earning six shillings a week, some workers were getting a pound a week. I recall shipwrights were getting thirty six shillings and if you worked in an office or were a civil servant, you would be getting a lot more. It’s exactly the same now.

The low pay unit in recent months has exposed some workers in this country were, quite illegally incidentally, getting fifty pounds a week. At the other end of the scale look in the financial papers and you can see jobs advertised now at a thousand a week and over, especially accountants and similar jobs.

Well, it was exactly the same then. Most of the workers couldn’t afford to save. There were those who getting higher rates of wages and who were able to save but the majority could not save at all. But the capitalists were in fact encouraging the workers who could afford to save, to save.

Why is it you suppose the capitalist were interested in the workers saving, the other part of the business encouraging the workers to work hard and study and become more skilful and all the rest of it?

A capitalist is out to make profit and if he can persuade the workers to work harder and not get drunk and all the rest of it he’ll get more work out of them and that would mean higher profits, but he is equally interested in, encouraging the workers to save. Why?

The reason is simply this. If a worker saved and didn’t waste his money on drink and so on he was able more-or-less to look after himself when he was sick and when he’s out of work, or even when he retires at old age. But the worker who threw all his money away and was destitute, immediately became a charge on the parish and the employers had to pay, so they didn’t want destitute workers being a burden on the parish. Employers wanted the workers to avoid temptation and so on and not be a burden on the capitalist class.

Now, if I may coin a phrase, there is no doubt whatever that at the moment Thatcher’s “Popular Capitalism,” is popular, and it obviously helped the Tories to win the last election.

But there was another factor that helped the Tories to win the last election and it was this; the Tories were able to launch this popular capitalism and get a lot of workers to vote for it because they could direct the workers attention to the fact that one of the last form of popular capitalism, the Labour Party’s Nationalisation programme had become largely unpopular.

Obviously you cannot get workers enthusiastic today about nationalisation in the way that they were, for example in 1945. It was obvious the promise of a lot of nationalisation, which the Labour Party represented quite falsely, of course, as Socialism that had attracted workers support. The Labour Party sold nationalisation that it would be in the interests of the workers.

In 1945 that gave the Labour Party the same sort of huge majority in the House of Commons that the Tories have got now. Well, as nationalisation declined in favour, the Tories were able to cash in on it and it brought in their popular capitalism and this sort of thing has happened before.

I said that in 1945 the Labour Party romped home with nationalisation which was very, very popular. It was helped at times by the decline of the Liberal Party, in other words the Liberal Parties 1911 form of popular capitalism, the Lloyd George reforms, had faded out and lost there attraction to the workers and nationalisation came along and took its place, and the same sort of thing happened back through the nineteenth century.

Go back thirty odd years earlier the industrial capitalists abolished the Corn Laws and this was another form of popular capitalism. What they said to the workers was look we’re going to abolish the Corn Laws the price of food will come down and you’ll be much better off.

Karl Marx pointed out, what the factory owners were interested in was not the bringing down the prices of food but bringing down wages with them, but, anyway it involved the workers just like the present version of the form of popular capitalism.

I come back now to this question that I’ve already raised, will Thatcher’s popular capitalism suffer the fate of all the others, that is of having its era of popularity and then falling into disrepute?

Thatcher had a great admirer, Brian Walden who writes in THE SUNDAY TIMES. And Brian Walden had an article on Thatcher quite recently. Its title was, “Currents of the lady with the will of iron”.

Well it’s all about what enabled Thatcher to win the election and things like that, and he was a great admirer of her. Well, I’m not concerned with the argument in THE SUNDAY TIMES article, but only with the last sentence in the last paragraph.

Brian Walden says:

The lady with the iron will, her triumph will progress, will go on, and on, and on unless...there is an act of God or an economic slump”.

Now, as the Iron Lady is also a God fearing lady, we needn’t worry about God, but what about the economic slump?

Walden doesn’t think there will be an economic slump. He’s got great confidence in Mrs. Thatcher, and he thinks she knows how to head it off.

Thatcher herself is absolutely certain that she knows how to prevent another slump and it’s not as Walden might suppose that she is simply going to prevent an economic slump through her iron will. Instead, she believes she has economic policies to prevent economic slumps occurring.

Over the years she’s spelt it out: get rid of inflation, nationalisation and monopolies, cut government spending, borrowing and interest rates, expand the manufacturing industry and export, through low interest rates, and a strong pound, weaken the trade unions, to cut trade union laws, encourage free trade and competition, and last but not least have a strong Tory government .

Now here you’ve got Thatcher’s policies spelt out, it’s quite clear, this is what she believes and this I have no doubt is what Brian Walden thinks will in fact happen in the future when she enacts her policies. But there was a certain year which I’ll name later in which all of these things were in existence.

There had been no inflation for quarter of a century, the only nationalised industry was the Post office, British manufacture was highly competitive, in fact Britain was then the workshop of the world and there were no monopolies because, it was not till later that monopolies began to develop in Britain in the last century, government spending in real terms was only one fifth of what it is now and there was no government borrowing.

When I say in real terms, you compare government spending with the total of the national income and the government spending in that year I’m going to name was only a fifth of what it is now.

Taxation was low, income tax was only three pence in the pound and interest rates were generally low, bank rates at that time was 3%, as against the present 9% bank minimum lending rate, the pound was strong, it was worth $4.86 dollars, that’s three times as much as it’s worth at the present time.

The unions were weak and small and subject to much tougher anti-trade union laws than they are now. There was no Labour Government to worry about, as there wasn’t even a Labour party and finally the Prime Minister was the Tory idol, Benjamin Disraeli.

Now with all these conditions being recreated through her economic policies Mrs. Thatcher would say there will be no slumps. Well the year was 1875. And if you look up your history books you’ll find that the reason why the year 1875 was known to historians is because it was the year in which began what was known as the, the Great Depression.

The Great Depression started in 1875 and lasted twenty years. And to tell you it was a merely nothing of consequence let me read you a description of it given by Winston Churchill’s father, Lord Randolph Churchill who was a Tory minister at the time, and he made this speech in the middle of the Great Depression.

We are suffering from a depression of trade extending as far back as 1875, ten years of trade depression, in the most hopeful either among our capitalists or among our artisans can discover no signs of a revival, your iron industry is dead, dead as mutton, your coal industries, which depend greatly on the iron industries, are languishing. Your silk industry is dead assassinated by the foreigner. Your woolen industry is in articulo mortis gasping and struggling. Your cotton industries is, seriously sick. The ship building industry which held out longest of all is come to a standstill. Turn your eyes where you will, survey any branch of British industry life you like, you will find signs of mortal disease

Now this is the twenty years Great Depression, a depression that Mrs. Thatcher believes should never happen. But it did occur. It went on for twenty years. It merely marked the permanent decline of British manufacturing in the world.

At the time, they held lots of committees of enquiry, and racked up all sorts of information but they did what capitalists do after every depression they say we will see that it doesn’t happen again, and of course it happens scores of time and it will happen again in future.

What Lord Randolph Churchill said about the Great Depression undermines Margaret Thatcher’s belief about her ability to prevent another depression. There is one very good reason for this. British capitalists and I suppose Capitalists in the world generally along with the economists have no idea about the economic laws of capitalism.

Politicians and Economists simply do not understand the economic system they defend. They could go on, year after year, facing economic depressions, and they only have to look up their history books to see that these depressions have happened scores of times before, but they still cannot find out why they happen.

And you have a more recent example also illustrating their total ignorance of capitalism and I refer to the great collapse of stock exchange prices on the 18th of October 1987.

Here you’ve have a Government with hundreds of economists in it’s employment, all knowledgeable people, all with their bits of paper from universities, all telling the Government they know what to do. It has the Bank of England with hundreds more economists on its payroll. They’ve got together with the Treasury and then went into the City, where, all the smart boys in the City apparently have got their finger on the pulse of finance, and they told the Government that it was safe for them to launch the British Petroleum share issue without the slightest inkling of what was coming. Share prices “collapsed” on the stock exchange and nearly wrecked the whole thing.

Now, if any of them knew anything about the history of Capitalism or if they had read Karl Marx they would have known all about this.

There are of course, and here I would make an exception, there are the smarter economists, who don’t seek the lime-light so much, who do understand this sort of business but as a result would never get employment in the Treasury, the Bank of England or the City.

You put this sort of question to yourself, all the press and the media said, look, suddenly share prices on the stock exchange “collapsed”. Share prices don’t collapse, somebody pushes them down, it is somebody getting into the market selling shares to push them down and then they leave.

These are the city speculators who are doing it, when they’ve gone down far enough they’ll be in again buying, and doing it again in the future, and still the economists and the government will not have any clues as to what’s going on or not.

Before leaving depressions, I want to have a look at profit-sharing schemes.

I told you the first profit-sharing scheme was in 1829 and there were quite a lot of them towards the end of the nineteenth century. A lot of profit-sharing schemes are being set up at the present time, the reason being, by the way, that just at the moment profits of British companies are rising very, very fast, at quite an exceptional rate. They won’t go on doing this, but they’re doing this at the moment, and the idea of getting in on a profit scheme looks quite attractive to the workers.

But in the Great Depression, the twenty year depression, two-thirds of the existing schemes faded out, they went bust, and in 1929 there were three hundred and twenty-six known schemes in operation but within five years fifty-six of them had been abandoned.

I’ll read to you the statement made by the Department of Employment in 1986:

Profit sharing and employee share-ownership are by no means recent developments profit-sharing schemes existed in the later part of the nineteenth century”.

However, there was a decline during the depression of the 1930s and with a few notable exceptions there was little resurgence of interest until the 1970s. You can be quite sure that when the next big depression comes along the same thing will happen again, the profit-sharing schemes will lose their attraction.

Now, come back again to this question as to whether there is any danger that popular capitalism will sweep the board and dominate politics. Put this question to yourself; all the main features that Thatcher’s Popular Capitalism were known and being put out a hundred and fifty years ago and they continued to be put out all through the nineteenth century. Well, if they were so attractive why shouldn’t they sweep the board, why didn’t all the workers own their own homes, why didn’t all the workers be in profit sharing schemes and why weren’t all the workers buying shares in all the companies and so on?

Even at its peak, the number of workers in profit-sharing schemes was only a quarter of a million, out of a labour force of about twenty million.

What you’re likely to see happening now is a lot of workers will go in for profit-sharing schemes, invited in by the employers, with some financial advantage from the government, some taxation advantage but when the next depression comes along they’ll peg out as they’ve done before.

And remember something else, workers who buy their own homes, what happens when they are out of work for a long time? They have to sell their homes in a falling market and as for their savings; savings of course get eroded during a depression. Workers having piled up, with some effort, whatever savings they can, they then find themselves eating into them during long years of depression.

I’m now going to come to a question that again is featured in all the profit-sharing schemes, right from the beginning. The first one, I told you in 1831 and all those that came after, and all emphasis one point, they all emphasis the point that they want to lessen the inequality of wealth between the rich and the poor.

In the 1831 version, from that little booklet, those who labour the steadiest and most zealously know that every improvement in the arts of life have the tendency to lessen the inequality in the distribution of wealth.

In other words, already the capitalists were saying to the workers, yes, we know wealth is very unequally distributed, we’re going to give you a chance to lessen the inequality, and as their favourite they held out Samuel Smiles and all his propaganda.

And it was in the propaganda of Lloyd George and the Liberals in the nineteenth century, and they were rather hot on this business of the division of wealth, and they had various schemes, they had taxation of money passed at death, with steeper death duty as their favourite thing

And of course, the Labour Party argued that nationalisation would be about the redistribution of wealth as between the rich and the poor. They said firstly, that they would raise wages, that the nationalised industries would pay higher wages than the non-nationalised industries, and secondly, they said in the nationalised industries workers would have job security, they wouldn’t have to worry about unemployment, and in the nationalised industry they’d have jobs for life and there are a lot of workers who still believe this.

Cast your minds back to the last Labour and Tory Governments; look at the hundreds of thousands of workers thrown out of the steel industry, out of the railways, and out of the coal mines. There was no job security for them. Companies were nationalised but it didn’t make any difference, remembering particularly, of course, the Labour Party’s own National Plan in 1965 in which they planned to get rid of a hundred and fifty thousand miners.

They were closing down unprofitable pits and they actually used the word “unprofitable pits” and they were closed down as quickly as possible.

This was the Labour Government which had put out propaganda for the workers, saying if you support nationalisation you would get job security. It was totally bogus.

Well, I now come to a contradiction in the course of events in the past fifty years. There have in fact been a very considerable reduction in the degree of inequality in the distribution of wealth but it has not been the result of Liberal, Tory or Labour policies for popularising capitalism. Instead it has been the result of the workers taking no notice of what they said. All of these politicians told the workers, look, don’t, endanger things by pressing for a higher wage, don’t come out on strike, and don’t worry about trade unions or anything like this.

There have been a considerable shift towards lessening inequality in the distribution of wealth and it’s been largely the result of the effectiveness of trade union organisation.

Now, I know that when I say this, I’m sure you’ll have heard a contrary view; all of you have seen statements like the rich getting richer and the poor getting poorer and other statements of the same kind. I saw a statement recently which meant in effect, that company profits were about four times as large as total wages.

People who make these statements haven’t taken the trouble to look up what is happening. There is in fact, a bundle of evidence, that they are wrong. I’ll give you a couple of examples. Between 1850 and 1914 various people, Professor Bowley is one, D. H. Wood is another, made studies of the movement of wages and prices during the nineteenth century, from 1850 up to the end of the century. And it is a fact, that the average real wages of the workers in this country increased between 1850 and 1914, by 90% and of course, it seems a very large figure, but in reality you’ll see what it boils down to is, it means an average increase of between 1% & 2% a year, albeit your 90%.

However it took place and it was largely at the expense of company profits, in other words the share going to profits is reduced as a consequence of the trade unions being formed, and becoming more effective. And there is another quite interesting figure because Karl Marx wrote about it himself in the pamphlet,” VALUE, PRICE AND PROFIT” in 1865. He quoted current estimates of the distribution of wealth and there are two of them, and if you put them together, then they are amounting to this, that the poorest 80% of the population, that is the great majority, got only 30%of the National Income. That was the view, Marx accepted this as the new authority, and of what was going on and seemed to be a reasonable estimate.

Now, the latest enquiry was by the Royal Commission in the 1970s, the Diamond commission, and they went into this business and they found that in 1972 the portion of the National Income going to the poorest 80% of the population had risen by 57% and that’s quite a big shift from 30% in 1865, the 57% in 1972, at the present moment, it is probably shifting slightly the other way.

But these are variations from year to year as long as capitalism is doing quite well, and the trade unions are therefore effective, it will probably stay round about the figure it is now, may rise a little, or fall a little.

This brings me to a point that you’ll find put in trade unions, in fact, a lot of members of trade unions believe, and are encouraged by their officials to believe, that trade unions have been quite useful in raising wages and improving conditions of work. They argue, why not carry-on with trade unions because we can finish the job as it were and make incomes equal.

What the Socialist Party has to point out to the workers is that there is a very, very, definite limit to what trade unions can do.

Trade unions can only be effective while capitalism is doing well. When capitalism falls into a depression what’s the use of workers going into a factory owner and saying; “look give us more money, or we’re going to close down your factory”, and he says: “don’t worry, I’m closing it down already, myself, I’m not making a profit”.

As Marx put it, wages can rise only to the point where there ceases to be profits for the capitalists, so trade unions can’t do this sort of carrying on the work and emancipating the workers through trade union organisation, it simply can’t be done, and of course, it’s not a figment of imagination, that companies do go out of business.

In the last ten years some hundred and fifty thousand companies have gone into liquidation, in other words capitalists could no longer make profits. So what was the use of the two million workers who lost their jobs in the last ten years going to the capitalist, if they had been employed by the hundred and fifty thousand companies going out, to liquidation, and going to them and saying we want more money.

The company just wasn’t there and the workers weren’t going to get it. The only solution is, is of course, to replace Capitalism with Socialism, in which there will be no Popular Capitalism, either by Thatcher, or the Liberals, or Labour Party because there will not be any Capitalism. There will be no State -Capitalism, Nationalisation, no profit-sharing, because there won’t be any profits, no wages or prices, because there will not be any wages or price system and of course, there will be no unemployment because there won’t be any relationship of employer and employed.

The members of society will co-operate to produce all goods and services society needs and all the members of the society will have free access to them, they will not need to buy them, or anything like that, and again, we have to remind workers that Socialism can’t be brought about by trade unions and strikes, and riots and armed revolts.

The only way, is first to win over the workers to accept the idea of Socialism. Workers have to recognise the necessity for Socialism, and to be politically organised, and to then to use their vote, through parliament, to get control of the machinery of government, including the armed forces which dominate society.

Then Socialist society will be in a position, having got control of power, and dispossessed the capitalists, with getting on with the quite new problem that will need tackling by them And that is increasing, as fast as they can, and as much as they can, the production of socially useful goods and services, in order, to make it practicably possible for the world to have free access on the socialist basis.

It is a very slow business, unfortunately, but as Marx said on some occasion, it’s unfortunately true that the workers will try every wrong road, before they find the right one, and of course, it is our job to direct them to what is the only right road.

(This lecture with some minor alterations was given by Edgar Hardcastle (Hardy) who was expelled with other sound Socialists from the Clapham based “Socialist” Party in May 1991 for so-called “undemocratic” behaviour” that is, for insisting on taking political action in the full name of The Socialist Party of Great Britain as required by Clause 8 of the SPGB’s OBJECT AND DECLARATION OF PRINCIPLES).

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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.