December 3rd 2011 - The Facts of Life under Capitalism.

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

Introduction: Class Struggle

The title of today’s lecture, THE FACTS OF LIFE UNDER CAPITALISM calls for comment. The title first appeared in an unnamed editorial in the DAILY TELEGRAPH in October 2011. The editorial bowed to current pressure by describing as “capitalism” the type of society we find ourselves living under although it was clear from the content of the editorial that the writer did not understand what the word meant. And second, perhaps more erroneously, he suggested that the facts of life under capitalism were best told by conservatives. They aren’t. As we shall see the facts of life under capitalism are best explained by Socialists.

A useful starting point for an understanding of the facts of life under capitalism is THE COMMUNIST MANIFESTO written jointly by the two Socialists, Marx and Engels and the first chapter of Engel’s own book, ANTI-DURING which was subsequently published as a pamphlet in more a popular form as SOCIALISM: UTOPIAN AND SCIENTIFIC.

Modern Socialism - the socialism of Marx, Engels and the Socialist Party of Great Britain is the direct product of the recognition of two important interrelated facts of life under capitalism.

First, modern Socialist theory describes with scientific precision the social reality of the class struggle fought economically over the intensity and extent of exploitation and politically over the ownership of the means of production between the world’s working class and the world’s capitalist class.

This is stated, for example, in the second clause of the Socialist Party of Great Britain’s OBJECT AND DECLARATION OF PRINCIPLES.

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”.

And second, modern socialist theory shows that the anarchy of commodity production and exchange for profit causes the social problems faced by the working class, social problems like war, unemployment and poverty. And these problems are severe and unremitting.

In the current world depression there are some twenty one million unemployed workers in the European Union alone (EUROSTAT 2011). There are wars all over the continents of the world; fought for raw resources, points of strategic influence and trade routes. And there is the obscenity of the wealth and privilege enjoyed by the capitalist class minority who own the means of production and distribution to the exclusion of the world’s working class majority.

Class Exploitation is a fact of life under capitalism.

Marx showed that capitalism differs from earlier class societies in two important ways.

First, in slave societies or in Feudalism, exploitation was largely transparent. The feudal serf, for example, would spend part of the year working on his own land – and part of it, especially at harvest time, working on the lord’s land.

Alternatively, the serf would be forced to hand over a large share of what his own land produced to the local baron, or bishop, or tax collector. In either case the situation was clear, though the serf might not be able to do much about it. Part of the produce was seized as a surplus by those with the coercive power to take it.

The labour of serfs could be divided up into “necessary labour time” to produce what they or their families needed – and the “surplus” labour time devoted to producing the goods taken by the ruling class and their retainers.

The division between necessary and surplus labour time occurs under capitalism as well. Marx called it the rate of exploitation. But under capitalism the division of social wealth into its earned and unearned constituents, is obscured by the way in which workers are divorced from control over the process of production, the allocation of goods – and by the manner in which workers sell their capacity to labour (their labour power).

Second, Capitalism is a uniquely dynamic and expansionary system of social production. This does not mean that earlier social systems were stagnant. However, there is no parallel with the fast pace of technological change under capitalism - nor with the expansion of capitalism across the world.

Marx acknowledged the “revolutionary” role of capitalism. In the COMMUNIST MANIFESTO he wrote:

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together”.

The reason for the distinct peculiarity of capitalism lay in the use capitalists made of the surplus they extracted from workers. Previously the wealth of Feudal Barons, the Church or Patricians, had by and large been spent on themselves, or on the pursuit of wars as a means of obtaining more wealth. Even the merchant capitalists of Renaissance Florence and Venice devoted most of their gains to the acquisition of land or the construction of palaces, works of art and churches.

The capitalists of the industrial revolution were by contrast obsessed with factories, investments, building up business empires through destroying competitors than works of art. They devoted much of the surplus not to their own consumption, though they lived well, but to investing back the surplus in the process of commodity production.

What is Capitalism?

As was noted in the introduction to this lecture, the leader writer in the DAILY TELEGRAPH had no idea what capitalism was as a historical social system with a beginning and an end in class struggle.

So what is capitalism? Some people have defined capitalism simply as a matter of private property. This is not so. Private property existed before capitalism. Some believe it is what takes place in the City or Wall Street but capitalism existed before modern financial institutions, stocks and shares and hedge funds.

Others argue that the pursuit of profit is the essential characteristic of capitalism. This is closer to the truth but is still not exact enough as a definition. The Athenian traders of classical Greece made profits and were acute businessmen. But they were not part of a capitalist mode of production.

The origins of modern capitalism as a world system of class exploitation can be traced back to the rapid spread of the market, international trade, and finance in the fifteenth and sixteenth centuries. Capitalist relations grew out of feudalism through class struggle. The capitalist class, unlike the working class, could accumulate wealth and property before it made its bid for political power with the revolutions in England in 1641 and France in 1789.

But the decisive stage in the emergence of capitalism came when capital –this vast accumulated wealth in the hands of the capitalist class –took direct control over the process of production and distribution. That in turn required that capitalism was in a position to combine together the two critical elements of commodity production and exchange for profit –the means of production on the one hand, the working class on the other.

Capitalism then can be precisely defined as commodity production and exchange for profit where the means of production and distribution are privately owned and where labour power of the working class is a commodity to be bought and sold on the labour market.

The availability of labour-power as a commodity to be bought and sold on the labour market required that labour had been freed from the control of the feudal land-owning class. Labour had to be free in the double-sense –free to sell its labour power to the highest bidder, but also “free” from an ownership of the means of production –the land, raw resources and machinery which could otherwise enable workers to work, produce, distribute and flourish as free men and women.

In one sense the freedom workers have under capitalism is real enough. They can move from one employer to another. Part of their time, outside work, is their own; where they can work for the establishment of Socialism or watch endless hours of Big Brother; attend the Opera or listen to pop music on their I-pods; grow potatoes on their allotment or watch their children play rugby in the rain on a Sunday morning. They can read CAPITAL from the first page to the last or queue up to by the latest Harry Potter book.

But in a more fundamental sense; the freedom enjoyed by workers outside employment is an illusion. Even socialists have to work for employers or are dependent on someone who does. As a class all that workers possess under capitalism is their labour-power. To survive workers have no choice but to sell that labour power to one capitalist or another. They can become trade unionists in a way that it was not possible under slavery and feudalism; something the workers struggled for even if it meant imprisonment and deportation. Yet trade unions only work within the wages system and are severely limited by what they can and cannot do.

The capitalist control over the means of production and distribution gives them the ability to use the worker’s labour power in order to accumulate even more capital as an anti-social objective in its own right. Real freedom only begins when wage labour is abolished and replaced by an association of free voluntary labour.

Capitalism is historical and social not natural

Another fact of life in capitalism is that capitalism is historical and social not natural and permanent.

To deny the existence of capitalism’s history and the change from one social system to another through the operation of the class struggle might appear to be perverse. Surely capitalism’s history cannot be denied? The working class has a history. We are part of a historical process; with a past, a present and a future. Even capitalism has a history.

As Marx noted in the Preface to the first German edition of CAPITAL:

…present society is no solid crystal, but an organism capable of change, and is constantly changing” (p21 Moscow edition).

The denial of capitalism’s history as a sequence of changing social systems through class struggle is in fact a political denial of the facts. The denial of Marx’s theory of history and the weight of evidence he bought to bear to support it, is the denial of capitalism as a historical social system with a beginning and an end in the class struggle.

The denial of Marx’s material conception of history which starts with real human beings trying to secure a living is the denial that there is a social system beyond capitalism. It is the denial that a socialist majority could and should create a humane social framework of common ownership and democratic control of the means of production and distribution by all of society in which the current problems facing the working class can be resolved by producing purely to meet social need. In short, the denial of history is the denial of Socialism as a distinct social system.

We begin, though, with the attempt to deny that even capitalism exists. There is a long history of denying the existence of capitalism as a distinct social system. The word “capitalism” is often missing from the writings of many economists and historians, and this refusal to acknowledge a historically formed social system has itself a long history.

The descriptive word “capitalism” is not to be found, for example, in the writings of Alfred Marshall or in the original PALGRAVE'S DICTIONARY OF POLITICAL ECONOMY (1894-9) and it is missing from the index to the first (1926) volume on BRITISH ECONOMIC HISTORY by the conservative historian, John Clapham. The word makes no appearance in Edwin Cannan’s, A REVIEW OF ECONOMIC THEORY of 1929. T. S. Ashton observed in the preface to a volume on the eighteenth century published in 1955, that no word ending in “ism” would be found in the pages that followed. Economists treated their subject matter as though it had no history. “Class” went to sociology and “politics” to political science. By the 1960’s and 1970’s the use of the word “capitalism”, except by Socialists disappeared altogether from mainstream political discourse.

When we turn to Raymond Williams’s book “KEYWORDS: A VOCABULARY OF CULTURE AND SOCIETY” (1976) for an explanation to the reason why economists and historians would not use the word “capitalism” the reason given is wholly political. Early defenders of capitalism used the word “Individualism” to describe the profit system. Similarly, during the Cold War the word “capitalism” was also denied an existence. Abstract and anodyne expressions like the “The free West”, “free enterprise” and “The Open Society” were often used instead. The capitalist became the “entrepreneur” or “captain of industry”. The word “Capitalist” is missing altogether from the latest edition of the Penguin ECONOMIC DICTIONARY (2004).

This was not always the case. The use of the word capitalism pre-dates Marx. Capitalism as a word describing a particular economic system began to appear in English from the early 19th century and almost simultaneously in French and German.

The description of capitalism as a distinct social system is found in the writings of the Utopian Socialist, Thomas Hodgskin who wrote in 1815:

…all the capitalists of Europe with all their circulating capital, cannot of themselves supply a single week’s food and clothing”,

And again:

…betwixt him who produces food and him who produces clothing, betwixt him who makes instruments and him who uses them, in steps the capitalist, who neither makes nor uses them and appropriates to himself the produce of both” (LABOUR'S RIGHTS AND LABOUR'S WRONGS, quoted in R. Williams loc cit)

For Marx, Capitalism was generalised commodity production and exchange for profit in which labour power had become a commodity to be bought and sold on the labour market. Capitalism was about the anti-pursuit of capital in its own right irrespective of human need. And it is this particular fact that is denied by capitalism’s prize fighters and gunslingers.

Ironically, one of first explicit uses of the word “capitalism” which treated capitalism as having a history is found in “THE PROGRESS OF CAPITALISM IN ENGLAND” published in 1918. The book was written by the economist W. Cunningham, a noted anti-socialist of the time, who did argue that capitalism had a history. Cunningham was also Archdeacon of Ely and was in a long line of political economists back to Malthus who were also theologians. Capitalism may, for Cunningham, have had a history but it fell within the plan of “divine government”.

“Capitalism” comes in from the cold war.

The novelist, John le Carre once wrote a spy novel set in the cold war entitled “THE SPY THAT CAME IN FROM THE COLD”. Well, following the collapse of the Berlin Wall in 1989 and the demise of the Soviet Union in 1991 the same could be said for the sudden re-use of the word capitalism.

We now find a plural use of the word “capitalism” as though it is so many styles of architecture. Economists and politicians write of Anglo-Saxon capitalism, Chinese capitalism, the social market capitalism of the European Union, and so on as though they are somehow all fundamentally different from one another. And in the current economic depression we have calls by the anti-capitalists, the Church of England, the Pope and the DAILY MAIL for “a fair capitalism”, a “moral capitalism” and an “Ethical capitalism”. However there is only one form of capitalism; a capitalism that is exploitive, anti-social and destructive.

What all these “capitalisms” have in common is the belief that there is no social system beyond the market, the buying and selling of commodities, wage labour and the private ownership of the means of production and distribution. This misplaced and dogmatic arrogance was reflected in a book “THE END OF HISTORY”, written by the American civil servant Francis Fukuyama, which claimed that the most ideal situation in which the production and distribution of goods takes place was to be found in the US. Following the demise of the Soviet Union the book was a celebration of American Imperialism and US capitalism’s apparent universal triumph over the six continents of the world.

Fukuyama concluded his essay by saying:

The end of history will be a very sad time. The struggle for recognition, the willingness to risk one’s life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism, will be replaced by economic calculation, the endless solving of technical problems…

And as a way of banging the last nails into the Marxian coffin, the 1996 World Development Report of the World Bank quoted the following passage from THE COMMUNIST MANIFESTO in its introduction:

All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions are swept away, all new-formed ones become antiquated before they ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life and his relations with his kind…The need of a constantly expanding market for its products chases the whole bourgeoisie across the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere

The quotation from Marx was meant to be ironic since the report looked at the way in which market reforms were being introduced into the former Soviet Bloc countries as being an indication that capitalism had seen off a rival competitor. The reality was that the exploitive wages system existed equally in the Soviet Union as it did elsewhere in the world.

This did not stop the claims that capitalism had triumphed over “Socialism”. For the anti-socialists, Adam Smith had won and Marx had lost. Lord-Rees Mogg, former editor of the TIMES announced with great pomposity that: “Marx is dead as a prophet. He is kaput” (INDEPENDENT, 5th February, 1990). THE NEW YORK TIMES also wrote that “capitalism has won” (quoted in J. Slovo, HAS SOCIALISM FAILED? London, 1990, p.7).

Defenders of capitalism claimed that the failure of state capitalism in Russia revealed Western capitalism to be the most efficient way yet discovered to produce and distribute goods. In the PEARS CYCLOPAEDIA of 1995 the author, while acknowledging the existence of capitalism, sneered at the failure of Russian State capitalism by pointing out that defenders of the Bolsheviks were always claiming that for most of the Twentieth Century “capitalism was involved in its death throes” but it was Soviet Union that perished not the capitalism of Western Europe.

State capitalism may have perished in Eastern Europe but Western capitalism has fared no better in meeting the needs of all society. When the PEARS CYCLOPAEDIA was published in 1995 there were about 26 million unemployed workers throughout Europe and Britain was passing through a severe economic depression with unemployment over 3 million. Thirteen years later the world still has poverty, war and high levels of unemployment. Capitalism, in all its forms, can never be made to work in the interests of all society. Capitalism may be the best of all possible worlds for the capitalist class but not for the working class majority.

Socialists do not grant the success of capitalism for the simple reason that Socialism has never been tried and tested to have failed. State capitalism in Russia was not Socialism. There was no free and co-operative social labour. The wages system existed in Russia as it does today in China, Cuba and Vietnam and so did the exploitation of wage labour.

There has been no country in which socialism has been tried and tested. In fact, socialism can only be a world-wide social system. Socialism, the socialism of Marx, Engels and the Socialist Party of Great Britain has never existed and leaves untouched the basic Marxian reason for the working class to seek an alternative to capitalism through the establishment of Socialism.

This has not deterred anti-socialists in denying that there is any practical social system beyond capitalism. Confident that capitalism no longer had a practical competitor; apologists for the profit system have used the word again with confidence. One academic even wrote a book entitled THE JOY OF CAPITALISM with a front cover showing an empty bed and a discarded FINANCIAL TIMES. Making money was, for the author, more important than making love.

However, capitalism is defined by its apologists in a very restricted and narrow way to mean just globalisation, free trade and the activity of the stock market. This poorly defined and inaccurate description of capitalism has its mirror image in the anti-capitalism movement of anti-globalisation; protectionism and so-called “ethical trade”.

As capitalism celebrated its manufactured millennium in 2000 its prophets told us that humanity had arrived at "the end of history". THE FINANCIAL TIMES, mouthpiece of corporate capitalism, informed us that the history of the Twentieth Century proves one thing: "utopias" are always bad and that the only aim of social action should be to "defend individual liberty"; that is, the freedom of the capitalist class to exploit the working class.

Of course this overlooked the fact that some are freer than others. If you are rich and powerful you are not only more free but also the one who makes the decisions that confines half the world’s population to hand-to mouth-poverty. Whilst billions of people live on less than $2 a day in the year 2011 the richest 1% of the world’s population owns 40% of global wealth. The richest 20% of the world’s population consume 90% of the world’s output. But it is not a question of geography. It is a question of class, class ownership of the means of production and the exercise of class power protected by the machinery of government.

The end of capitalist utopias

And what about the utopian dream of free market fundamentalists that capitalism can be made to work in the interests of all society? As we look around the world today surely the FINANCIAL TIME'S censure of the pursuit of utopias should apply equally to the failed capitalist utopia of free markets, free trade and wealth and prosperity for everyone. Following the failure of free market utopianism we are told to expect years of austerity and the economic equivalent of a British Winter of drizzle, cold, and bitterness.

As we approach the fag-end of 2011, the end of a year of financial crises and economic depression, we now sees a stream of books being produced by mainstream economists critical of free market capitalism, for example, the Cambridge economist Ha-Joon Chang’s latest book “23 THINGS THEY DO NOT TELL YOU ABOUT CAPITALISM” published by Bloomsbury books and Professor Steven Queen’s “DEBUNKING ECONOMICS: THE NAKED EMPORER DETHRONED published by Zed Books. Mainstream criticism of capitalism has not been so pronounced since the 1930’s. But it is a criticism without an alternative.

A few miles away from Marchmont Street Community Centre where this lecture is being given, anti-capitalist demonstrators have set up Camp City adjacent to St Pauls Cathedral. But it is anti-capitalism not pro- Socialism. And the anti-capitalists are motivated by moral outrage against City bankers and finance institutions not a reasoned assessment of capitalism, the origin of wealth owned by all the capitalist class and a revolutionary Socialist alternative. The facts of life of capitalism; that it is a class divided society, that it is based on the private ownership of the means of production and distribution and runs for the benefit of the capitalist class as a whole, the industrial capitalists like Richard Branson, Rupert Murdoch, Bill Gates and the Mittal brothers not just rich bankers in the City passes them by.

And when the anti-capitalist protesters are visited by Sir Mervyn King from the Bank of England they receive, without criticism, his sermon that economists are doing all they can “to make capitalism work again”. Well if these anti-capitalists had known their Marx, they could have told the Governor of the Bank of England that capitalism is working; it is meant to go into periodic economic crises and trade depressions with bankruptcies and high levels of unemployment due to the contradictions within commodity production and exchange for profit.

Capitalism is working in line with its economic laws even though it means bankruptcy, unemployment and the curtailment of production in the face of human need. Economic crises and trade depression are a fact of life under capitalism and that is why it is quite disingenuous of the Socialist Workers Party and other political parasites who have leeched onto the anti-capitalist movement to hold lectures and conferences under the banner “Capitalism is not working” when, quite simply, it is.

Does capitalism have a history?

The denial of capitalism with an origin, history and termination in class struggle, has a long history and was dealt with by Marx as far back at the 1840’s. In a letter Marx wrote in 1846 to the Russian literary critic and journalist, P. V. Annenkov he said that the singular mistake held by those defending capitalism was that:

They all want competition without the pernicious effects of competition. They all want the impossible, namely, the conditions of bourgeois existence without the necessary consequences of those conditions. None of them understands that the bourgeois form of production is historical and transitory, just as the feudal form was. This mistake arises from the fact that the bourgeois man is to them the only possible basis of every society; they cannot imagine a society in which men have ceased to be bourgeois” (p.175).

There are still a majority who cannot imagine a society in which men have ceased to be bourgeois. Many who have come into contact with the Socialist Party of Great Britain do not think the working class are cut out for Socialism. They do not believe the working class can initiate a socialist revolution. They hold a hopeless pessimism, whinging and whining about the lack of Socialist progress over the last hundred years or so looking for routes through the dead-end politics of anarchism, nihilism, social reforms and Leninism.

We are entitled to question this conservative pessimism. Are we seriously to believe that the capitalist class will hold on to their privilege and private property ownership forever? The proposition being advocated by politicians like Thatcher, Blair, Brown and Cameron denies social evolution, social progress and fundamental changes to social relationships. Can a social system freeze into permanent solidity to display no sign of social change and revolutionary movement?

Our opponents have a problem. And it is this. There is no historical precedent for their assertion that capitalism is the end of the line. It is a wild belief that is entertained by those who hope or want capitalism to last forever. But just because you want capitalism to last forever does not mean that it will. Where is the evidence?

Are Socialists running out of time?

What of those critics who have said that Marx’s prediction for Socialism has been refuted by the passage of time? These critics also say that even the Socialist Party of Great Britain has been around for over a century and there are not many more socialists today than there was when the Party was first established. Hasn’t the passage of time refuted the socialist case against capitalism? Is it not the case that the working class are not cut out for socialism? At what point are we going to give up?

Marx never gave a specific time for the establishment of Socialism. Neither has the S.P.G.B. We have not said that Socialism will be established on the 1st of January 2100. We are not millenarians.

What we do say is that Socialism cannot be established until the majority of the working class are prepared to take conscious and political action to establish common ownership and democratic control of the means of production and distribution by all of society.

We are not obliged to give a timetable for the establishment of socialism. The socialist case against capitalism is sound and valid while capitalism continues to exploit the working class and ensures it leads a life stamped with the hall mark “second best”.

If capitalism was around in a century’s time or even in 2600 are we to conclude that socialism will still not be necessary? For if capitalism is still around in 2600 so will the social problems of war, unemployment and poverty, so will the exploitation of the working class and the class struggle. So will class power and class privilege.

Or are those who cannot see socialism in the foreseeable future proposing that socialists should be doing something else or that capitalism will eventually solve the problems of world poverty, war and unemployment? If that is the case Socialists think we should be told and shown how this is possible.

Such critics contribute to the dark conservatism that has tried to close any horizons beyond capitalism. They lack the confidence and imagination to think in terms of history and revolution. The remarks that will be made against a current corrosive conservatism will be aimed at this group as it will be to the wider group of academics, journalists and politicians, both liberal and conservative, who have proposed an alternative account of history that denies that there is anything beyond capitalism and the profit system.

We should recall the words of Lothair (795-855), emperor to the Holy Roman Empire, which was to run on for another 1000 years; “All things change and we change with them”. The feudal remnants of the Holy Roman Empire perished with the First World War nevertheless Lothair’s observation is applicable to capitalism as it is to all social systems. And that is a fact of life you will not read in the DAILY TELEGRAPH.

Is there an alternative to capitalism?

And there is one final fact of life in capitalism to consider; the fact that there is a Socialist alternative.

The denial of history comes in many forms; “the End of Ideology”, “the Collapse of Communism”, “the closure of Socialism” “Post-Marxism”, “TINA” (There is no alternative), “The End of History” and so on. All these examples are in effect a denial of the possibility that there can be any social system after capitalism. Capitalism, they claim, is all we have got. Capitalist class relations and private property ownership will just carry on and on into the future.

The denial of history begins with Adam Smith. In the WEALTH OF NATIONS Smith drew a distinction between the social and fleeting form of Feudalism and the natural permanency of capitalism. When Marx began his study of economics and history he derided the artificial distinction made by economists like Smith and likened it to religion.

Every religion claims its competitors are inventions of men. They believe that only their own religion emanates from God. Likewise defenders of capitalism are prepared to admit that previous social systems were the construction of people but refuse to apply this view to capitalism which they conceive in terms of a religious iconography; perfect markets, eternal economic categories, and the permanence of market institutions. A recent example was given the economist, Joseph Stiglitz, in his book, “GLOBALISATION AND ITS DISCONTENTS” (2002). He recalled how Adam Smith put forward the idea that markets by themselves lead to efficient and perfect outcomes.

Stiglitz went on to claim that the formal mathematical proof –specifying the conditions under which Smith’s statement was true - was provided by two Nobel Prize winners in economics, Kenneth Arrow in 1972 and later by Gerard Debreu in 1983 and. The claim by economists of perfect, self-adjusting markets and constant uninterrupted growth rings a little hollow in 2011.

What Professor Stiglitz forgot to add was that when Gerard Debreu proposed his theory of capitalism’s “perfect efficiency” in 1983 it was at a time when there was a world trade depression. A similar world economic depression in 1974 occurred some two years, after Professor Arrow published his theory of perfect markets. The anarchic unpredictability of capitalism as it passes from one crisis to another differs markedly from the theoretical explanations of capitalism provided by professors of economy. Stiglitz himself should have been aware of this himself for he wrote in the same book about the reality of capitalism at the end of the 20th century:

In 1990, 2.718 billion people were living on less than $2 a day. In 1998, the number of poor living less than $2 a day is estimated at 2.801 billion” (WORLD BANK, GLOBAL ECONOMIC PROSPECTS AND THE DEVELOPING COUNTRIES 2000 p. 253).

Now, more than one-half of the world's people live below the internationally defined poverty line of less than U.S. $2 a day—including 97 per cent in Uganda, 80 per cent in Nicaragua, 66 per cent in Pakistan, and 47 per cent in China, according to data from the World Bank (PRG 2005).

What all these learned professors did not answer was the question, “just who is the market efficient for”. For it was not the majority of the planet living on about $2 a day.

When economists claim capitalism to be natural what they are saying, in effect, is that it functions as a law of nature independent of history and time. They believe Capitalism derives from natural laws which must always govern commodity production and exchange for profit. Up until capitalism, they claim, there was history but, as if by magic, with the triumph of capitalism there is no more history.

But as Marx showed in his materialist conception of history, capitalist relations of production were not natural but social. The working class was historically formed; the Working class is part of history and a force in history. Marx traced the historical development of the working class from journeymen and landless peasants, of the women and children of the landless who were herded into the city slums of 19th industrial England to a mature working class capable of thinking for itself in line with its own class interest. The working class has moved through history and changed it.

In the COMMUNIST MANIFESTO, Marx wrote the working class at first formed an “incoherent mass”. As the working class increased in numbers and concentrated in commodity production, workers formed themselves into trade unions. And he optimistically concluded:

This organisation of the proletarians into a class; and consequently into a political party, is continually being upset again by the competition between the workers themselves. But it ever rises up again, stronger, firmer, mightier

Labour, the labour market, wages are all historically formed, they all have a history and this history continues through capitalism as the working class becomes aware of itself, aware of being imprisoned within the wages system and consciously and politically organises itself to transcend this exploitive social system through Socialist revolution. Adam Smith did not see the working class formed out of capitalism to become a revolutionary force for change. Unlike Marx he was class blind.

TINA’s logical flaw

What of the assertion that there is nothing beyond capitalism. Is the assertion coherent? Is it not logically flawed in so much as it leads to an absurd conclusion? Suppose we grant to our opponents their belief – and it is a belief of almost theological proportions - that capitalism is going to last forever. We are not saying it will, and we will be showing that there is no compelling reason or evidence to show that it is, but suppose, for argument’s sake, that there is no practical alternative to capitalism, what would this mean?

Well, several things would present themselves immediately. It would mean that unlike any other social system in history capitalism, commodity production and exchange for profit and the private ownership of the means of production will last indefinitely from one crisis to the next.

The implications of a permanent capitalism would mean that the class struggle would also have been contained and the working class bought off, like the Roman proletariat, with a diet of bread and circus. The working class, the class Marx identified as the force for freedom would have collapsed into an unimaginative mediocrity being incapable of seeing anything beyond the pay packet.

As we draw these conclusions together we can see at once the absurdity of the claim that capitalism will last forever. The absurdity lies in the belief that capitalism has the capability to resolve the conflicting interests of the profit system and to become something it can never be; a system run in the interests of all society.

We only have to consider the very real problems that face the working class on a daily basis, year after year, decade after decade and generation after generation to see at once the absurdity of this proposition.

For over two hundred years or so, capitalist politicians and legions of social reformers have been unable to solve the fundamental problems of unemployment, poverty, war, social alienation, poor housing and so on. They look as unlikely now to solve these social problems as they did seventy years ago when they trumpeted full employment, the end to poverty and no more wars. Capitalism will always throw up discontent, dissatisfaction and questioning. There will always be a fertile ground for the development, transmission and growth of Socialist ideas.

A recent advocate of a timeless capitalism lasting forever is the TIMES economic correspondent Antole Kaletsky he was in fact writing at the height of the capitalist boom in 2003 – a period in which Gordon Brown announced there was to be no more “boom and bust”. Under the heading “Capitalism is humanity’s most benign creation” he waxed lyrical about buying and selling, free trade, globalisation, the market and US style capitalism. He claimed that capitalism had the ability to deliver goods and services in a way no other social system has been able to do. He chided those critics of capitalism for not having what he called:

…anything remotely resembling a constructive alternative to propose” (2.5.03)

Yet, in the same edition of the TIMES, tucked away in one of the foreign news pages, was a report stating that, even on an inadequate definition of poverty, in the richest country in the world about 932,000 US black children live in extreme poverty, a rise of 25% since 2000 and that, overall, some 3.4 million black children lived in poverty in 2001. Capitalism is not benign towards these children but then for intellectual prostitutes like Kaletsky and others who have taken Murdoch’s shilling, the profit system is benign. They are well looked after.

So what is a constructive alternative to capitalism? A constructive alternative is that production and distribution should take place just for social use; just to meet human need. It is a simple proposition, a practical alternative to the anti-social drive of profit making and capital accumulation.

Why is this simple and rational socialist proposition attacked? The answer is easy. The establishment of Socialism requires the abolition of private property ownership and the wages system through the political action of a Socialist majority. Kaletsky, even if he could be persuaded to see the practical socialist alternative to capitalism, would not last one day if he advocated the case for Socialism on the pages of the TIMES.

Those who chide socialists for being unable to show a constructive alternative to capitalism have no interest in an alternative anyway. These “prize-fighters” and “gun-slingers” serve the interests of the capitalist class. They are not disinterested enquirers into reason or the truth. They are employed to keep Mr Murdoch and his class in the style and comfort they are accustomed to as Murdoch’s heirs found out recently, but before the Telephone-hacking scandal, when their generous father gave each of them £50 million pounds worth of shares. There is no austerity for the Murdoch’s. When Cameron states “we’re all in it together” he excludes the rich, the powerful and the privileged; that is the class which includes himself and his Etonian chums.

Capitalism cannot meet the needs of all society.

There is one last fact of life under capitalism to be considered. And that is the fact that capitalism can never meet the needs of all society. Capitalism does not exist for that purpose.

Defenders of capitalism can never be convinced of an alternative to private property ownership of the means of production. As Marx rightly observed they can never get outside their bourgeois skin. They cannot free their thinking from the categories of capital which they take as natural and eternal. However, the appeal of socialism is not to the defenders of the capitalist class, nor to its philosophers like Popper, Hayek and von Mises who believe it is their job to legislate what is and not science, what is and is not logically possible and what is and is not practical.

The Socialist case is not directed at the capitalist class and its political agents but to the working class. Socialists have to foremost show that capitalism causes the problems the working class face on a daily basis and that capitalism can never to reformed or made to work in their interest. The case for Socialism comes out of this politics. Socialism is not an add-on utopian extra.

And as we survey capitalism it is quite evident that it is the cause of social problems like unemployment, war, social alienation and poverty. Millions of children unnecessary die through diseases which could be cured if the motive of production was not the anti-social pursuit of profit. All these social problems are totally unnecessary. All these problems exist as a direct result of capitalism. If a social system is incapable of resolving social problems, with or without social reforms, for the benefit of all society then an alternative social system becomes a pressing necessity.

Therefore an absurd consequence does come from the assertion that capitalism will last forever and that is capitalism would have to meet the needs of everyone on this planet, sufficiently and for the foreseeable future. After two hundred years capitalism has demonstrated that it is incapable of meeting the needs of all society and the existence of legions of social reformers and charities endlessly trying to mitigate this or that social problem only exist to confirm the socialist case against capitalism. This gives Socialists very good grounds for rejecting the baseless proposition that there is no alternative to capitalism.

We can also consider the example of history. And we will find, for socialists, a consolation in history which the ruling class and its apologists have no access to.

At the end of the crushing defeat by Roman legions, with Spartacus dead on the battlefield, 6000 slaves were crucified along a 2000 metre stretch of the Appian Way from to Capua to Rome.

The symbolic exercise of crucifying the slaves back to Rome was to demonstrate to this servile class the imperial power of Roman society; the power of its ruling class and the perennial glory of ancient Rome. Within a few centuries that Empire had been swept away. No Empires last for ever and this fact apply equally to the United States as it once did to Rome.

Here is another example. At the end of the Peasant’s revolt, Richard II reportedly told the serfs that “serfs you are and serfs you shall remain forever”. John Ball, one of the leading thinkers of the Peasant’s revolt was tried in front of the King at St Albans and then hung drawn and quartered with the kings retort about Feudalism lasting forever ringing in his ears. You will not find any blue plaque commemorating John Ball for the enlightenment of tourists in St Albans although his place of execution is well known. His history was written by the victors. Nevertheless, four centuries later there were no serfs to be found in Britain. Instead there was a propertyless working class with children sent to the mills and women forced down the mines.

Richard II was wrong. The ruling class he represented had also been swept away, first, ideologically, in the 17th century, through a Civil War which disposed of the doctrine of the divine right of kings and the feudal power base of the monarchy; then in the 17th century by a Glorious Revolution which gave political power to a cabal of landed aristocracy, City bankers, merchants and the early industrial capitalists.

Today, the capitalist class are optimistically secure in their belief that capitalism is to last forever. Here, as way of an example, is Mr Warren E. Buffet, the third richest man in the US: “There’s class warfare, all right but it’s my class, the rich class, that’s making war, and we’re winning.”

That statement was made by Mr Buffet in THE NEW YORK TIMES on November 26th 2006 at the height of capitalism’s boom when there was going to be no more “boom and bust” and the profit system was going to last forever. Mr Buffet should study his history. No social system lasts forever.

From the perspective of history the socialist movement acting in its own interests through political class struggle is relatively young. It is not a smooth and linear process. Mistakes have been made and there are periods when this movement is stronger than in others.

The working class movement has passed through three political stages; an incoherent stage around the actions of groups like the Luddites, a more coherent phase which saw workers identifying themselves as a class with political interests such as the Chartist movement, the First International, and the early Social Democratic parties like the Social Democratic Federation and the Socialist League and then another phase which saw workers becoming transparently aware of their class position, an understanding that it could only be furthered by themselves, democratically and through revolution within a principled political Party with only one object; Socialism.

This was reached at the turn of the last century with the establishment in 1904 of the Socialist Party of Great Britain and the publication of the SPGB’s OBJECT AND DECLARATION OF PRINCIPLES which set out the sole political aim for a socialist majority to establish common ownership and democratic control of the means of production and distribution by all of society.

From this point in history the political movement of the working class has been painfully slow. There is the problem of the number of socialists propagating Socialism and the access to communication systems to disseminate socialist ideas. There is the problem of identity when so many other parties describe themselves as socialist or communist. The twin poisons of nationalism and religion play their part in turning workers away from understanding their class interest. So does the dull repetition of work, the pressures of family life. The class struggle and socialist politics is not easy.

We should not forget that the class struggle is a two-way process where ruling ideas are the ideas of the ruling class. And there is the problem of persuasion; of persuading workers to become aware of their class position, to understand that capitalism can never be made to work in their interests and that the only way to solve social problems reformers have failed to resolve is through conscious political action as socialists.

The consolation of history

There is a danger of resignation and cynicism at the future prospect for Socialism. Socialists would say that it is misplaced. There is, as we will see, the consolation of history.

In an essay written in 1944, George Orwell remarked that in the modern age history is written by the winners who then go on to control the past as well as the future (AS I PLEASE, Tribune 4 February 1944). He may have had a point but in fact all past ruling classes have controlled the production of official history.

So who speaks for the past? In the ancient slave societies of Egypt, Greece and Rome it was the scribes and court historians who transmitted a past reflecting the power and prestige of the ruler and his family. In Feudalism the kings and princes, popes and abbots also had their historical apologists. For the poor, the down - trodden and the outcast it was only by word of mouth that alternative histories could be transmitted.

Although the capitalist class has its historians the modern age of capitalism has as one of its starting points Johann Gutenberg’s invention of moveable type and the creation of the printed book. A life that was provincial, rural and insular was soon urban, cosmopolitan, and united, in part because of the knowledge and power provided through the written word.

New intellectual horizons were opened up by the vast amount of information that was suddenly available. Authorities were subject to challenge, and seemingly powerful ideas could be questioned. Where books were once so rare that the fear of theft kept them chained to posts in libraries, within four decades of Gutenberg’s invention there were one thousand printers who produced thirty thousand titles with a total of nine million copies that circulated throughout Europe.

Where literacy was once the province of the wealthy and learned, soon over half the European population was reading books about the past. Where only the ruling class and its representatives could speak for history, now almost anyone could.

With the development and wide-spread use of internet communication and access to all forms of information means that we are indeed are own historians. We are not dependent on the ruling class and their representatives for our history. We can produce an objective system of rational knowledge because we are not tied to the myths of religion and nation states. Orwell was wrong. History can be written by the powerless. We can also determine our own future.

In his 1931 presidential address to the American historical association the historian Carl Becker spoke about, “Everyman His own historian” (AMERICAN HISTORICAL REVIEW, vol. 37, no. 2, p. 221–36). However, Marx’s theory of history is not for everyman. Marx’s theory is not inclusive but exclusive. It is a theory and explanation of history and historical change for the propertyless, the exploited, and the wage slave. It is a theory of history that the ruling class and its politicians want to deny but cannot do so because the facts are so compelling.

Our opponents want to deny the politics of liberation from class relations, from class monopoly of the means of production and distribution and from class exploitation. They deny the class struggle but they cannot explain away a simple event like the need for workers to form themselves into trade unions. They have no valid and sound explanation for events in history around class struggle and class repression. Their’s is a history of kings and queens, the Magna Carta, the Bill of Rights of Statesmen and legislators. It is not our history.

In denying an alternative to capitalism they are denying history. They are denying a history where social systems do change; a history of class struggle and a history of revolution.

Whether or not the struggle for the working class for the abolition of capitalism will be successful depends to a large extent on the political will, consciousness and organisation of the working class.

The other fact of life is that capitalism will not and cannot leave the working class alone. Marx pointed out that the working class is concentrated and unified by the expansion of capital. The working class is forced to struggle against the problems thrown up by the expansion of capital and they increasingly grow in numbers as capital expands throughout the world and the labour market becomes a world market for the buying, selling and exploitation of wage labour.

Crucially, within the productive process the capitalist class are always trying to extend and intensify the rate of exploitation while simultaneously introducing machinery to discipline and pacify the working class through the creation of an industrial reserve army to act as a dampener on wage increases.

And for empirical confirmation of employers using the introduction of machinery against workers in the class struggle we only have to look at Chinese capitalism. Chinese workers in some sectors of the economy are managing to secure higher wage increases. The response of the employers is predictable; the use of capital to buy labour-saving machinery. This is what Robert Preston of the BBC recently reported on a visit to China:

The reason… [why]... Chinese companies are investing relatively more in capital equipment:…[is that]…they want to produce more with fewer people,… following 30% and 40% rises in factory wages…. (CHINA: A WARNING AND AN OPPORTUNITY, BBC News 1st December 2011).

The use of capital investments by employers to supplant workers and to try to force a reduction in wages by increasing the industrial reserve army is not a new policy but something known to Marx – he wrote an entire chapter on the subject in CAPITAL VOLUME 1 chapter XXV, The general Law of Capitalist accumulation.

So here is a quotation from Marx by way of a conclusion. The quotation is from Marx’s COMMUNIST MANIFESTO. Marx wrote that capitalism was once a progressive force in history. He wrote that capitalism constantly revolutionised production but was now a “fetter on production”. This is demonstrably bought out in crises where there are high levels of unemployment, unused machinery and stockpiles of unsold commodities existing side-by-side with unmet human need. However, there was a sting in the tail glossed over by the World Bank Report and those who believe capitalism is here to stay:

All fixed, fast frozen relations, with their train of ancient and venerable prejudices and opinions are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind”.

It is in this sense of facing with sober senses the real conditions of life – the facts of life under capitalism - that the profit system creates its own grave-diggers: the world’s working class.

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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.