Thursday, September 29, 2011

Everything free with the SPGB

The Socialist Party of Great Britain is part of the World Socialist Movement ( more an aspiration rather than the reality, sadly) and founded in 1904, emerging from the 19th social democracy political parties.

When someone comes across the Socialist Party for the first time, a common reaction is to consider us as just another left-wing political organisation. The Left use similar terminology to us, talking of socialism, class struggle, exploitation, etc, and invoking Karl Marx. But digging a little deeper will show that our political position is very different from that of the left-wing. The Socialist Party is not on the Left. The left-wing like to act as though they are Moses, and lay down the commandments in stone for followers to obey. Left-wing propaganda offering leadership adds to the impression that the worker is an inferior being who is incapable of thinking, organising and acting and imbues further the master-and-servant mentality of the worker. As already stated all Left organisations start from the premise that workers are too stupid to understand or want socialism by their own volition. Therefore, revolutionary ideas have to be introduced from outside the working class by all-knowing "professional revolutionaries" who will lead workers to the promised land. We are not and never have been connected with the ideas of Lenin, Trotsky or Stalin. We have always been opponents of state-ownership and were one of the earliest proponents of the theory that the USSR was state-capitalist and not on any road towards socialism/communism (regarding the distinction between both words are to be found in Lenin and not Marx ).

The SPGB engage in the parliamentary process not to form a government but for the purpose of seizing control of the state for its abolishment. We insist on the necessity of majority understanding behind socialist delegates with a mandate for socialism, merely using the state and parliament for one revolutionary act, after which the Socialist Party has no further existence. The State is the centralised organised power of the capitalist class. In the interests of that class it performs a dual function – administers the property affairs of the various sections comprising the class, and takes whatever steps are considered necessary to keep the working class in order. It is the latter co-ercive function of the State that has concerned us here. It controls every department of the armed forces, all the way from the policemen’s clubs up to the colossal force of the atomic bomb. So long as the capitalist class is allowed to remain in control of the military, there would be no chance of dispossessing the capitalists, or abolishing their system. The primary move on the part of a revolutionary working class entails gaining control of the armed forces. The House of Commons, Reichstag, Congress or Dail, these so-called popular assemblies control the armed forces. Every bill presented, and every law passed, regarding every phase of military expenditure, reduction, or increase, has to go through the parliamentary channels. There is no possibility of the workers successfully engaging the capitalist class on the basis of brute force or violence. The tremendous and destructive nature of military weapons in society today preclude the possibility of successful competition. The owning class has a supreme and invincible weapon within its grasp: political power, – control of the army, navy, air and police forces.

We will need to organise politically, into a political party, a socialist party, a mass party that has yet to emerge, not a small educational and propagandist group such as the SPGB is at present. This future party will neutralise the state and its repressive forces but there is no question of forming a government and "taking office", It will proceed to take over the means of production for which the working class have also already organised themselves to do at their places of work. This done, the repressive state is disbanded and its remaining administrative and service features, reorganised on a democratic basis, are merged with the organisations which the majority will have formed (workers councils or city/town communes or whatever) to take over and run production, to form the democratic administrative structure of the stateless society of common ownership that socialism will be. By gaining control of the powers of state, the socialist majority are in a position to transfer the means of living from the parasites, who own them, to society, where they belong. This is the only function or need the working class has of the state/government. As soon as the revolution has accomplished this task, the state is replaced by the socialist administration of affairs. There is no government in a socialist society. “Capturing” Parliament is only a measure of acceptance of socialism and a coup de grace to capitalist rule. The real revolution in social relations will be made in our lives and by ourselves, not Parliament. What really matters is a conscious socialist majority outside parliament, ready and organised, to take over and run industry and society. Electing a socialist majority in parliament is essentially just a reflection of this. It is not parliament that establishes socialism, but the socialist working-class majority outside parliament and they do this, not by their votes, but by their active participating beyond this in the transformation of society.

One of the driving forces for the creation of the party was the view that democracy was integral to the establishment of socialism and thus a party with that object needs to be a reflection of the democratic principle. So although with a long history as a political party based on agreed goals, methods and organisational principles we still remain a small propagandist group. Mandating delegates, voting on resolutions and membership referendums are democratic practices for ensuring that the members of an organisation control that organisation – and as such key procedures in any organisation genuinely seeking socialism. Socialism can only be a fully democratic society in which everybody will have an equal say in the ways things are run. This means that it can only come about democratically, both in the sense of being the expressed will of the working class and in the sense of the working class being organised democratically – without leaders, but with mandated delegates – to achieve it. In rejecting these procedures what is being declared is that the working class should not organise itself democratically.

As a matter of political principle the Socialist Party holds no secret meetings, all its meetings including those of its executive committee being open to the public. This means that all its internal records (except, understandably, for the current membership names and addresses which remains confidential) are open to public consultation. In keeping with the tenet that working class emancipation necessarily excludes the role of political leadership, the SPGB is a leader-less political party where its executive committee is solely for housekeeping admin duties and cannot determine policy or even submit resolutions to conference (and all the EC minutes are available for public scrutiny with access on the web as proof of our commitment to openness and democracy). All conference decisions have to be ratified by a referendum of the whole membership. The General Secretary has no position of power or authority over any other member being a dogsbody. The SPGB has no hierarchy and all members are constitutionally equal. Despite some very charismatic writers and speakers in the past, no personality has held undue influence over the the SPGB. Under UK electoral law, a registered political party has to name its leader and to comply the SPGB simply drew a name out of a hat and it is doubtful if any member recollects who it was

We actually have a test before someone can become a member.The SPGB will not allow a person to join it until the applicant has convinced the branch applied to that she or he is a conscious socialist. Surely it must put some people off? Well, that may be, but it can't be helped. There would be no point in a socialist organisation giving full democratic rights to those who, in any significant way, disagreed with the socialist case. The outcome of that would be entirely predictable. This does not mean that the SPGB has set itself up as an intellectual elite into which only those well versed in Marxist scholarship may enter. The SPGB has good reason to ensure that only conscious socialists enter its ranks, for, once admitted, all members are equal and it would clearly not be in the interest of the Party to offer equality of power to those who are not able to demonstrate equality of basic socialist understanding. Once a member, s/he have the same rights as the oldest member to sit on any committee, vote, speak, and have access to all information. Thanks to the test all members are conscious socialists and there is genuine internal democracy, and of that we are fiercely proud. Consider what happens when people join other groups which don't have this test.The new applicant has to be approved as being "all right". The individual is therefore judged by the group according to a range of what might be called "credential indicators". Hard work (often, paper selling) and obedience by new members is the main criterion of trustworthiness in the organisation. In these hierarchical, "top-down" groups the leaders strive at all costs to remain as the leadership , and reward only those with proven commitment to the "party line" with preferential treatment, more responsibility and more say. New members who present the wrong indicators remain peripheral to the party structure, and finding themselves unable to influence decision-making at any level, eventually give up and leave, often embittered by the hard work they put in and the hollowness of the party's claims of equality and democracy.

We share in common with the Industrial Workers of the World the view that unions should not be used as a vehicle for political parties. The SPGB have always insisted that there will be a separation and that no political party should , or can successfully use , unions as an economic wing, until a time very much closer to the revolution when there are substantial and sufficient numbers of socialist conscious workers. And thats not in the foreseeable future. It is NOT the SPGB's task to lead the workers in struggle or to instruct its members on what to do in trade unions, tenants' associations or whatever, because we believe that workers are quite capable of making decisions for themselves and creating their own flexible means of resisting the encroachments of capitalism,depending on situations and circumstances. For the Leninist, , of course, as you pointed out in one article, all activity should be mediated by the Party (union activity, neighbourhood community struggles or whatever.)

While work-place democracy is unquesioningly a pre-requisite for socialist administration, it seems as you never took the issue to its logical end.The real democratic safeguard is when no-one can deprive another of the means for life - food clothing and shelter - through sectional ownership of them, regardless of how internally democratic their enterprise might be. This was the SPGB argument against syndicalism and industrial unionism and co-operatives. Since socialism is based on the social ownership (= ownership by society as a whole, common ownership) of the means of production, the trade union ownership proposed by the syndicalists (the mines for the miners, railways for the railmen) was not socialism at all but a modified form of sectional ownership. A society run by syndicates/ industrial unions would be a society which would perpetuate the occupational divisions which capitalism imposed on workers. Such a form of organisation would divide the workers on the basis of the industries in which they were engaged, with the inevitable consequence that the industrial interest must triumph over the social interest which socialism so fundamentally demands. In addition, the relations between the separate union-run industries, it has been argued, would have to be regulated either by some central administration, which would amount to a government and so give rise to a new ruling class or by some form of commercial exchange transaction (even if conducted in labour-time vouchers rather than money as many syndicalists proposed.) In other words, a syndicalist society would be a sort of capitalism run by the unions. Socialism aims not to establish "workers power" but the abolition of all classes including the working class. It is thus misleading to speak of socialism as workers ownership and control of production. In socialist society there would simply be people, free and equal men and women forming a classless community. So it would be more accurate to define socialism/communism in terms of the common ownership and democratic control of the means of production by and in the interest of the whole people. "Workers council" would have been a misnomer since socialism, being a classless society, involves the disappearance of the working class just as much as of the capitalist class. "Democratic councils" would have been a more appropriate term. A society where the means of production belong to everybody and run by democratic councils, that's socialism.

The threat of the bureaucracy assuming a new class in socialism cannot arise. Free access to goods and services denies to any group or individuals the political leverage with which to dominate others, a feature intrinsic to all private-property or class based systems through control and rationing of the means of life. The notion of status and hierarchy based upon the conspicuous consumption of wealth would be devoid of meaning because individuals would stand in equal relation to the means of production and have free access to the resultant goods and services.This will work to ensure that a socialist society is run on the basis of democratic consensus. This will work to ensure that a socialist society is run on the basis of democratic consensus. Decisions will be made at different levels of organisation: global, regional and local with the bulk of decision-making being made at the local level. A socialist economy would be free access to the common treasury with no monopoly of ownership, and not even the actual producers who in the past have called for ownership of their own product, as promoted by mutualism and syndicalism, can deprive individuals in society to the common ownership of the means of production and distribution. A socialist society will be one in which all people will be free to participate fully in the process of making and implementing policy. Whether decisions about constructing a new playground, the need to improve fish stocks in the North Sea, or if we should use nanobots to improve our lives, everyone everywhere will be able to voice their opinion and cast their vote. However, the practical ramifications of this democratic principle could be enormous. If people feel obliged to opine and vote on every matter of policy they would have little time to do anything else. The traditional image of huge crowds with their hands up in council meetings, or queues of people lining up to put a piece of paper in a box, is obviously becoming old-fashioned, even in capitalism. On the other hand, leaving the decision-making process to a system of elected executive groups or councils could be seen as going against the principle of fully participatory democracy. If socialism is going to maintain the practice of inclusive decision making which does not put big decisions in the hands of small groups but without generating a crisis of choice, then a solution is required, and it seems that capitalism may have produced one in the form of 'collaborative filtering' (CF) software. This technology is currently used on the internet where a crisis of choice already exists. Faced with a superabundance of products and services, CF helps consumers choose what to buy and navigate the huge numbers of options. It starts off by collecting data on an individual's preferences, extrapolates patterns from this and then produces recommendations based on that person's likes and dislikes.With suitable modification, this technology could be of use to socialism - not to help people decide what to consume, but which matters of policy to get involved in. A person's tastes, interests, skills, and academic achievements, rather than their shopping traits, could be put through the CF process and matched to appropriate areas of policy in the resulting list of recommendations. A farmer, for example, may be recommended to vote upon matters which affect him/her, and members of the local community, directly, or of which s/he is likely to have some knowledge, such as increasing yields of a particular crop, the use of GM technology, or the responsible use of land by ramblers. The technology would also put them in touch with other people of similar interests so that issues can be thrashed out more fully, and may even inform them that "People who voted on this issue also voted on…" The question is, would a person be free to ignore the recommendations and vote on matters s/he has little knowledge of, or indeed not vote at all? Technology cannot resolve issues of responsibility, but any system, computer software or not, which helps reduce the potential burden of decision making to manageable levels would. How could too much voting be bad for you.

The SPGB describes socialism as free access. Actually, socialists don’t want to “abolish” money. What we want is to see established a system of society where money would become redundant, as it would in a society based on the common ownership and democratic control of the means for producing wealth. People would cooperate to produce what was needed to live and enjoy life and then have free access to this. Socialism will have no need to abolish money. The need for money will have vanished with the abolition of capitalism. Although money will disappear in socialism this does not mean that there will no longer be any need to make choices, evaluations and calculations. Our argument is that these evaluations and calculations, including those conceding the non-monetary "cost" of objects in terms of the effort and materials used to produce them, will be done directly in kind, without any general unit of account or measurement, neither money nor labour-time. Wealth will be produced and distributed in its natural form of useful things, of objects that can serve to satisfy some human need or other. Not being produced for sale on a market, items of wealth will not acquire an exchange-value in addition to their use value. In socialism their value, in the normal non-economic sense of the word, will not be their selling price nor the time needed to produce them but their usefulness. It is for this that they will be appreciated, evaluated, wanted… and produced. So estimates of what is likely to be needed over a given period will be expressed as physical quantities of definite types and sorts of objects. Decisions apart from purely personal ones of preference will be made after weighing the real advantages and disadvantages and real costs of alternatives in particular circumstances. The belief that without money nothing can work is flawed. The truth is that production is carried out by people not money. Problems are solved by human beings, not money.

The SPGB website is at
The WSM website is at

Monday, September 26, 2011

We conspire

Conspiracy theories are not a new phenomenon – far from it but perhaps not to the extent that to-days conspiracy theories have recently proliferated and taken hold even amongst sophisticated and well-educated sections of the population, and the way in which virtually no major event or phenomenon can currently unfold without someone crying “conspiracy!” and finding a ready audience. We have entered an era of paranoid politics. Interest in real political ideas has declined and hand-in-hand with this has gone a suspicion of all those engaged in the political process. This distrust, which has been fuelled by very real revelations of wrong-doing in high places, has tainted the popular perception of not just the individuals involved but of the entire political process has been gripped by distrust. And distrust breeds paranoia. Most conspiracy theories are really believed not by those who come into closest contact with the "conspirators" but by the disenfranchised and dispossessed. The extreme fringes of capitalism's political spectrum, on the far left and the far right, whether they be anti-globalisation crusties or the US militiamen in the hills of Montana. David Aaronovitch detects a pattern in which conspiracy theories are “formulated by the politically defeated and taken up by the socially defeated”. Conspiracies become an excuse to explain away a movement’s own inherent weaknesses or unpopularity by attributing blame to a ruthless enemy. Aaronovitch argues that belief in conspiracy theories is harmful since it “distorts our view of history and therefore of the present”

Postmodernism, a loose body of thought, contends that interpretation is everything and truth is transitory , and that science and reason are merely particular interpretations of events, being “narratives” with no more claim to validity than any other. It is postmodernism and the parallel distrust of science and progress that has arisen in recent years that has opened the way for conspiracy theories to multiply – whether they have a basis in reality or not. At the same time – and without coincidence – various New Age and occultist ideas and practices have gained ground. Postmodernism, irrationality and conspiracy theories now unite to form a bizarre trinity that informs much popular interpretation of historical events and processes. It is no surprise that those most attracted to New Age and occultist theories are typically those who also give most credence to conspiracism as a systematic way of interpreting events. These are people who do not merely contend that conspiracies of some sort have taken place or have been uncovered (whether it be the JFK assassination or Roswell ) but whose entire worldview is a conspiratorial one.

The Nazis, whose worldview was one drenched in anti-semitism to the extent that they thought the world dominated by a cabal of Jewish bankers, were steeped in a mysticism and occultism that had been handed down to them by fellow initiates of secret societies like the Thule Society. In fact many have gone one step further than the Nazis in thinking that all major conspiracies, together with all secret societies, are intrinsically linked, being but different aspects of the same age-old conspiracy. The current favourite is the “Illuminati” who were, amongst many other things, allegedly behind the founding of the United States (or its Fed Reserve), the UN, the EU and any other supposedly “centralising”, “controlling” bodies. in this theory, the Bilderberg Group, the Trilateral Commission, the Freemasons etc are all slowly working towards the achievement of some kind of centralised, totalitarian New World Order. Mysticism and conspiracist ideas interlock and reinforce one another.

Conspiracy theorists gain plausibility by taking established fact and embellishing it, so that one can’t tell where truth ends and fiction begins. There are undoubtedly shadowy societies of the super-rich which are well-documented. The Skull and Bones in America includes many senators, four past presidents, while in Britain we have the Masonic Lodge. But of course, they can’t be very secret or we wouldn’t know about them.

Conspiracy theorists take the view that the modern world society must be controlled from the top – someone, somewhere must be pulling the strings. The conspiracy theorists interpret every event (even contradictory ones) as being evidence that everything is under some secret groups control. The stock-in-trade of the conspiracy writers is rumour, innuendo, guilt-by-association and half-knowledge passed off as fact and a re-iteration of the inter-connectedness of some sections of the capitalists class (the Rothschilds, for example). Yes, there is plentiful evidence that organisations like the Bilderberg group exist. Yes, there is evidence that their members are rich and powerful people with their own agendas and quite some influence. There's no doubt that such groupings do exist. For instance, George Monbiot discusses the European Round Table of Industrialists (ERT), an association of the bosses of forty-six of the biggest companies in Europe. They have long advocated the creation of a single market in Western Europe, and called for the improvement of transport links - including the building of the Channel Tunnel. The ERT does not control governments, but it certainly influences them. But no, there is no evidence that such organisations “rule the world” and manipulate countries and economies at will – and no-one has yet provided any such evidence.

The conspiratorial worldview is certainly not promoting an understanding of modern society. Those unfamiliar with the analysis of Marxian economics are yet to realise that at the heart of the capitalist economy is a genuine “anarchy of production”. Conspiracy theorists' assertions that a complex, technologically advanced society like capitalism cannot be at root “anarchic” in many of its operations, are misplaced. There are conspiracies all the time, little ones. Big ones tend to spring leaks however, and few are likely to believe in one that has lasted 250 years without being "outed". The capitalist class is not a conspiracy, not because it is open and, more or less, above board, but because it is not united, as the Illuminati presumably are. Because of the anarchic, competitive and contradictory nature of capitalism a conflict-free “New World Order” is practically impossible.

the Roma in the Czech republic

Jindich Nestler wouldn't call himself a racist. "The good gypsies can stay," he says. "But most of them are lazy or criminals or even terrorists. They have to disappear."

Nestler is a 36-year-old official of the far-right "Workers' Party for Social Justice," or DSSS, by its Czech initials. DSSS is a successor party to the neo-Nazi group Dlnická Strana (DS), which was banned a year and a half ago by the highest Czech administrative court. One reason the court gave for the ban was that Dlnická Strana organized rallies that led to pogrom-like riots against the Roma.

Around 250,000 Roma live among 10 million Czechs. There are 300 slums around the country. Several can be found in big-city centers. Real-estate companies pay the Roma -- or offer to forgive their debts -- if they abandon potentially lucrative buildings in city centers and move to remote regions near the German border. The companies even bring them to specific abandoned houses, then charge high rents -- or even claim welfare subsidies directly from the state.

Some homeowners "exploit" the Roma, says Martin Šimáek, director of a state agency for social integration. Real-estate speculators charge them unprecedented, sky-high rents and excessive rates for water and power, he says. "This leads to unrest and creates problems for coexistence throughout the entire town," Šimáek told a Czech radio station.,1518,786495,00.html#ref=nlint

Sunday, September 25, 2011

Labour Party conference

“I’ll make capitalism work for the people..." promised Ed Miliband during his successful campaign to become Labour leader. Workers have heard this all before. The Labour Party has always tried to make capitalism work for the people. And every time that it has been in office, it has failed miserably to do so. The reason Labour – and indeed the Tories who also talk of a “people’s capitalism” – fail to make capitalism work for the people is that this is an impossible mission. Capitalism just cannot be made to work in the interest of all. It is a profit-making system that can only work as such, in the interest of those who live off profits.

The driving force of capitalism is the accumulation of capital out of profits. When this slows down, as at present, there is a crisis. So, governments must not do anything that might discourage the making of profits to accumulate as capital; in fact, even if it wasn’t their original intention they have to end up doing all they can to encourage this. Inevitably, this brings them into conflict with the wage and salary working class whose labour is the source of profits, imposing wage restraint and/or austerity on them. All governments have to put profits before people because capitalism, the system within which they have to work, runs on them.

The Labour Party has failed, so let’s start a new one. That’s what some trade unionists and leftwingers are saying. But why? Surely one of the lessons of the 20th century has been that Labourism is a dead end. It can’t succeed. Not because its leaders are insincere or incompetent or corrupt or not resolute enough. It fails because it sets itself the impossible mission of trying to gradually reform capitalism into socialism. This can’t be done, as experience, not just theoretical understanding, has confirmed. The last thing that is needed today is a non-socialist, trade-union based “Labour” party. We have seen the past and it doesn’t work.

In February 1906, the fledgling Labour Representation Committee (LRC), under the leadership of James Keir Hardie renamed itself and the Labour Party came into being. The Labour Party consciously steered the social-democratic or socialist movement of the early twentieth century away from social revolution to a futile policy of ‘reformism’, maintaining unswerving support for the exploitation of working people, the wages system, commodity production and the private ownership of the means of producing wealth. It had relied on a cynical propagation of the pretence that state-run capitalism and reforms represented "stepping stones" to a socialist society and what emerged from those years of reformist efforts was not a slowly evolving socialism but a Labourism which increasingly judged itself by the success of the one thing it could do in government – manage capitalism; all reformist baggage what emerged from years of reformist efforts was not a slowly evolving socialism but a Labourism which increasingly judged itself by the success of the one thing it could do in government – manage capitalism; The myth of nationalisation as an answer to the problems of capitalism beng more or less dead and all reformist baggage being abandoned in the pursuit of Labour's desire to manage capitalism better than the other lot. The Labour Party engineered its own metamorphosis, re-branding policies and redefining its agenda. The commitment to nationalisation enshrined in the 1918 Party constitution was abolished and Trade Union influence over policy – always more mythical than real – was publicly abandoned. Its image, thus transformed, seemed revitalised and business, media and the electorate acclaimed the party that now called itself New Labour.

If there are with two other people and the first one of them is openly hostile, abuses you at every turn and is obviously working for interests diametrically opposed to your own, you would have to be crazy to consider them a friend. But if the other person keeps telling you that they are on your side, sympathises about how awful the first person is being, and says you should trust them instead – while all the while they are pursuing interests just as opposed to yours and will proceed to stab you in the back at the first opportunity – then who is your real friend? Neither of them is the answer, of course, though we can say that you are less likely to be deceived by the openly hostile one. The function performed by the Labour Party is always to appear as the benign friend to the workers in distinction to the “wicked” Tories. Hoping that the Labour Party will behave differently is an unrealistic – indeed utopian – expectation. Any party that tries to run capitalism gets its hands grubby, as a matter of course, in what is a very dirty business. Voters vote governments out because they appear incompetent, incapable of finding solutions to the daily problems that confronts wage and salary earners. But government can never solve these problems because their permanent solution lies only in the abolition of capitalism and the wages system. Economic laws that politicians are powerless to change and leave little room for manoeuvre determine what politicians do and how they must react. The policies propounded by Tory or Labour are similar because they are manifestations of the same political imperative – a continuation of capitalism – and are distinguishable only to the extent that they propose different organisation methods to administer the same economic system. In misguided expressions of defiance that flow from frustration and lack of understanding, voters repeatedly swap Labour governments for Tory, or Tory governments for Labour - as they have on eight separate occasions since the second world war – in the hope that it will somehow make a difference.They are always disappointed by the outcome. How often have disillusioned Labour supporters and voters cried “betrayal!”?Mandating a political party to administer capitalism means that workers surrender political power to their class enemy - a lesson that workers seem unable to grasp as the same mistake is slavishly repeated over and over again.

Now as the natural conclusion to reformism has completely overrun the Labour Party , they are a simple party of capitalist maintenance, with objectives of some form of new society being not just shunted into the background but completely out of existence. They are now more dedicated than ever to running with optimal efficiency the very system that creates poverty, misery, homelessness and war. As for those old Labourites who blame all on the mistakes of the past and present on certain leaders, this simply adds to the argument against leadership. In any case, the leader as a individual is irrelevant. Knocking one leader out of office and replacing them with another won’t change the system, and it’s the system that all attention should be focused on if we desire a radical change in the way we live.Trading one group of pro-capitalist apologists and careerist politicians for another can never be the answer. Changing society’s economic structure is the answer.

Friday, September 23, 2011

Chinese State-Capitalism

90% of the 1,000 richest people tracked by the Hurun Report are either officials or members of the Chinese Communist Party.

The most important and lucrative sectors of the economy have been reserved for state-owned-enterprises (SOEs)...SOEs are run like private corporations, seeking to maximise profits. They made an estimated 1 trillion yuan ($150.83 billion) in net profits in 2010...In the first half of last year, the four state-held commercial banks alone raked in an average of 1.4 billion yuan ($211.16 million) a day....

Almost all of China’s richest people have made their money in state-dominated sectors, such as property and construction, resources, other heavy industries and telecommunications. This could be through preferential access to the best land (often seized illegally from citizens) for property developers, privileged access to below market rates of capital, or special access to raising capital or equity in listed SOEs. In almost all cases, those benefiting are CCP officials or members...

...the 150 centrally managed SOEs owned two-thirds of all fixed assets in the country, while their revenues amount to about half of the revenues generated by all Chinese firms each year...over two-thirds of board members, and three quarters of senior executives of SOEs are either CCP officials or members...

...While SOEs have increased their revenues by 20 to 30% each year, mean household income has increased by a paltry 2 to 3%...

...One of the keys to the Party's power base is that it retains control of material, career and professional opportunities. This may be good news for the growing ranks of the mega-rich but not the majority of the Chinese people who can't get a foothold on the social ladder...

At the March National People’s Congress 70 of the 2,987 members had a combined wealth of 493.1 billion yuan ($75.1 billion). By comparison, the wealthiest 70 people in the 535-member U.S. House and Senate, who represent a country with about 10 times China’s per-capita income, had a maximum combined wealth of $4.8 billion.
Rupert Hoogewerf, the director of research for the Hurun Report, said there are likely more dollar-billionaires in the NPC. For every one among the 189 the company identified in all of China, mainly through company filings, he estimates there’s another whose wealth remains hidden from the public. For every yuan billionaire, he estimates they’ve missed two. “There will be individuals on the NPC that just haven’t come to the surface,” Hoogewerf said. “There’s a lot of hidden wealth in China.”

Li Zhaoxing, a former foreign minister and spokes person for the National Party Congress said “I have found around me many good citizens who have gotten rich through their own hard labor and intelligence.” - Just as often claimed by Fox TV's Bill Reilly !!!

23.5 percent of the 1,000 richest Chinese individuals' fortunes comes from the property industry, up from last year's 20.1 percent. The rentiers

Liang Wengen, chairman of China's heavy machinery giant Sany Group, has been named the wealthiest person in the Chinese mainland. His personal fortune totaled 70 billion yuan.

Thursday, September 22, 2011

division of labour

Doctors and nurses appear to work harmoniously together but the traditional role of the doctor as the dominant professional means nurses face both structural and professional inequalities. The nursing profession is denied opportunities to contribute to patient care and that hinders the development of equal and collaborative working relationships. Evidence suggests when nurses and doctors work as equal partners, patients have better health outcomes. If you pay a visit to your local doctor, there’s a good chance you’ll spend some time with a nurse.

Nurses in general practice provide specialist health services, education and advocacy. For patients with long-term health complaints, having a nurse involved in care can improve health outcomes and have increased patient participation in continuing care and encouraged lifestyle changes. The general practitioner has traditionally been the sole custodian of care but as the number of nurses in general practice increases, it’s likely that this traditional role will be challenged.

Nurses who enter the workforce today are prepared for clinical independence, critical thinking, and professionalism. No longer do they view themselves as doctors'“handmaidens”. Nor are nurses substitute doctors in general practice – they meet the needs of patients by approaching problems in a different way. They seek to understand how a person is experiencing both their health and their illness so the nurse acts as an advocate for the patient. Collaborative partnerships between nurses and doctors in general practice will result in comprehensive primary health care – the beneficiaries will be patients and the community.

A poor view on life

The poor, we're taught to believe, will always be with us. A good many of the poor have jobs, but receive too little pay to lift their family up from poverty. One in six Americans lives in poverty, more than 46 million. Twenty-five million people are in need of full-time work; 49 million go without health insurance excluded from a health-care system that is twice as expensive, per capita, as those in other industrial nations, captured by the drug lobby and the insurance and private hospital industries.

Poverty is destructive. The poor are more likely to be sick, vulnerable from hunger, to lack prenatal and infant care and to contract diseases that go undiagnosed. But if being poor makes Americans sick, getting sick too often makes them poor. Serious illness is the leading cause of bankruptcy. Poverty destroys hope. A hungry child finds it hard to learn. A toothache drowns out a teacher's voice. As poverty rates increase, the number of dropouts rises. Poverty destroys neighborhoods. Foreclosed homes become drug dens. The desperate turn to crime. Exploiters - the payday lenders, the sub-prime peddlers - target the vulnerable. The poor are less likely to have access to transportation that might take them to a job. They are less likely to have access to affordable groceries. They are more likely to go to an under-funded school, from which the best teachers have fled. The working poor are more likely to be in debt, more likely to live paycheck to paycheck.

The Chairman of Merck was paid $17 million last year, a period during which his company laid off considerable employees. Bank of America's chairman was paid $10 million, and that’s being paid for in part by the laying off of 30,000 workers. The 400 richest Americans got 12% wealthier.

Lets change the world

adapted from

Wednesday, September 21, 2011

some more party graphics

A few quotes

Buddha said: "Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared"

Chomsky said: "There are no magic answers, no miraculous methods to overcome the problems we face, just the familiar ones: honest search for understanding, education, organization, action that raises the cost of state violence for its perpetrators or that lays the basis for institutional change -- and the kind of commitment that will persist despite the temptations of disillusionment, despite many failures and only limited successes, inspired by the hope of a brighter future."

Einstein said: "The definition of insanity is doing the same thing over and over again and expecting different results."

Sunday, September 18, 2011

co-opting co-ops

In the minds of many workers the co-operative movement is regarded as being in some way linked up with socialism. The theorists of the original co-operative movement saw it as a movement that would eventually outcompete and replace ordinary capitalist businesses, leading to the coming of “the Co-operative Commonwealth” (which was an alternative name for socialism). They would constitute, as it were, little oases in the desert of capitalism. They anticipated that the movement would grown until finally the workers would have achieved their emancipation. Essentially society was to be transformed by means of experimental communities. Each community would own its own means and instruments of production and each member of a community would work to produce what had been agreed was needed and in return would be issued with a note certifying for how many hours he had worked; he could then use this note to obtain from the community's stock of consumer goods any product or products which had taken the same number of hours to produce. (G.D.H. Cole was another who wrote on what he called “Guild Socialism”. Although Cole’s blueprint did provide for close links between consumers and producers which could be interpreted as “production directly for use”, it still envisaged the continuation of finance, prices and incomes. And it was to come into being through the guilds eventually outcompeting capitalist industries in the marketplace)

We know what happened. This was because they had to compete with ordinary capitalist businesses on the same terms as them and so were subject to the same competitive pressures, to keep costs down and to to maximise the difference between sales revenue and costs (called “profits” in ordinary businesses, but “surplus” by the co-op). The co-operative movement was outcompeted and is now trying to survive on the margin as a niche for “ethical” consumers and savers, leaving the great bulk of production, distribution and banking in the hands of ordinary profit-seeking businesses. Co-operativism did not provide a real solution to the workers' situation. It was incapable of providing an answer in the interests of all workers. At no time did it question the capitalist production relationships - it questions only superficial features (monopolies, competition, etc.). The co-operative movement cannot solve the basic economic problems of the workers as a whole, or even of the co- operative societies' own members. Where it was a success it was merely the success of essentially capitalist undertakings.

Co-operatives can only ever involve a minority of workers, and the more they are integrated into the capitalist economy and its profit- seeking, the more their members will have to discipline and pressurise themselves in the way the old bosses did - what is known as "self-managed exploitation". The fact is that there is no way out for workers within the capitalist system. At most co-operatives can only make their situation a little less unbearable.

Owen believed that his co-operative commonwealth could begin to be introduced under capitalism and in the first half of the 1830s some of his followers established "labour bazaars" on a similar principle: workers brought the products of their labour to the bazaar and received in exchange a labour-note which entitled them to take from the bazaar any item or items which had taken the same time to produce, after taking into account the costs of the raw materials. These bazaars were failures but the idea of labour-time vouchers (or "labour-money") appeared in substantially similar forms in France with Proudhon and in Germany with Rodbertus and is one source of currency crank theories.

They were not money at all, but merely a method of sharing out consumer goods. As Marx said of the Owenites' plan for a co-operative commonwealth: Owen's "labour-money", for instance, is no more "money" than a ticket for the theatre. Owen presupposes directly associated labour, a form of production that is entirely inconsistent with the production of commodities. The certificate of labour is merely evidence of the part taken by the individual in the common labour, and of his right to a certain portion of the common produce destined for consumption. Engels says much the same in his comments in Anti-Duhring on Owen's labour-notes.

Writing in 1875 Marx had to concede that, in the early stages, consumption would have to be rationed and he suggested this be done by means of labour-time vouchers, but specifically said that these would no more be money than a theatre ticket was, but eventually all goods and services would be free for everybody to take according to need. Today, nearly a hundred years later, this stage could be reached very rapidly once socialism/communism had been established. In one of his criticisms of the Gotha Programme which was adopted by the German Social Democrats in 1875 when the followers of Lasalle united with the group with which Marx and Engels had been working. In the course of this criticism Marx made his well-known statement about labour-time vouchers in socialism ("not as it has developed on its own foundations, but ... just as it emerges from capitalist society"):
"The individual producer ... receives a certificate from society that he has furnished such and such an amount of labour (after deducting his labour for the common funds), and with this certificate he draws from the social stock of means of consumption as much as costs the same amount of labour. The same amount of labour which he has given to society in one form he receives back in another."

Supporters of state capitalism have used this passage to try to show that Marx thought that money could exist in socialism. This is so much nonsense since elsewhere Marx specifically stated that labour-time vouchers were not money:
"The producers may ... receive paper vouchers entitling them to withdraw from the social supplies of consumer goods a quantity corresponding to their labour-time. These vouchers are not money. They do not circulate."

Marx nowhere states that labour-time vouchers were the only method of distributing wealth in socialism; they were only one possible method. The actual method adopted would depend on the circumstances . Alternatives were suggested, as for instance by Edward Bellamy in his Looking Backwards written in 1887 who wanted everybody in socialism to be issued with a credit card entitling them to obtain an equal amount of consumer goods. In any event, later on in his criticism of the Gotha Programme Marx made it quite clear that if labour-time vouchers were used in Socialism this would be a temporary measure imposed by the comparatively low level of technology. In time, he saw, when the "springs of co-operative wealth flow more abundantly" Socialist society could abandon labour-time vouchers (or whatever) and go over to "from each according to his ability, to each according to his needs", that is, to free access to consumer goods.

In 1875 the then existing level of technology might well have meant that many consumer goods would unavoidably be available only in limited quantities for some years after the establishment of Socialism. But in the hundred years since, technical progress has made it possible for the springs of co-operative wealth to flow more abundantly than Marx could have foreseen so that free distribution-to each according to his needs-can be implemented almost immediately after Socialism has been established. Potential abundance has made the idea of labour-time vouchers quite outdated. For Marx there was no "must" about labour-time vouchers (and so more or less "equivalent exchange"); they were just one possible way of allocating consumer goods before free access could be introduced.

The 60/70s group Solidarity advocated a self-managed market economy blueprint published as Workers Councils and the Economics of A Self-Managed Society, a long article originally written in 1957 by Cornelius Castoriadis . This pamphlet painted a picture of factories and other workplaces being controlled by elected Workers Councils in the context of the continuation of the money-wages-profits system. Thus, in a given factory, the workers would elect a Council which would decide on the level of wages, the price of the product, the amount of profits to be re-invested, etc. This was Solidarity's conception of "socialism"; which would never work - either because if the working class had reached the degree of consciousness needed to establish it then they would establish real socialism instead or, if they hadn't, then it would degenerate into some kind of state capitalism. It was the completely impractical idea of direct workers' control of a capitalist economy. They put all the emphasis on "democratic control" or, as they put it, "self-management", and believed that this could be achieved without ending the money-wages-profits system which is the essence of capitalism. Socialism is not just concerned with emancipating workers as workers (i.e. wealth-producers) but as human beings (i.e. as men and women). Socialism aims not to establish "workers power" but the abolition of all classes including the working class. It is thus misleading to speak of socialism as workers ownership and control of production. In socialist society there would simply be people, free and equal men and women forming a classless community. So it would be more accurate to define socialism/communism in terms of the common ownership and democratic control of the means of production by and in the interest of the whole people. "Workers council" would have been a misnomer since socialism, being a classless society, involves the disappearance of the working class just as much as of the capitalist class. "Democratic councils" would have been a more appropriate term. A society where the means of production belong to everybody and run by democratic councils, that's socialism.

As long as capitalism lasts workers will have to find a source of money one way or another and so will always be in a dependent and precarious position. A number of lessons can be drawn from the recuperated enterprises movement in Argentina in. Firstly, that built into capitalism is a class struggle between those who own the means of wealth production and those who don't and who are therefore forced by economic necessity to sell their ability to work to those who do. This class struggle is not just over the price and conditions of sale of the commodity workers are selling. Ultimately, it's about control over the means of production. If, as happened in Argentina after the economic melt-down of December 2001, capitalists abandon their factories or, as happened in Russia in 1917, Spain in 1936, and Hungary in 1956, the capitalist state is temporarily incapable of protecting capitalist property, then the workers more or less spontaneously take over their workplaces and keep production going. Workers are not going to let themselves starve: if the means of production are there, and there's no state to stop them using them, they'll go ahead and use them, even if they have no revolutionary pretensions. However, as soon as the state has re-gained its strength again, then it is in a position to confront the workers and re-instate its authority and re-impose property ownership laws to the means of production only on its terms. Which leads to the second lesson: the importance of who controls the state. At the moment, in Argentina as elsewhere, this is in the hands of people favourable to the continuation of capitalism, itself a reflection of the fact that most workers too don't see any alternative to capitalism. The state, therefore, upholds legal private property rights. The importance of political power is in fact fully recognised by the recuperated enterprises movement. This is why they are calling for the law on property rights to be changed so as to recognise the property rights of the workers cooperatives which are running recuperated enterprises; which will only happen if they can get the elected law- makers to do so, either by pressuring them from outside or by electing ones favourable to a change in the law.

The end of capitalism can only come as a result of a consciously socialist political movement winning control of political power with a view to abolishing all capitalist property rights and ushering in the common ownership and democratic control of the means of production. The preconditions for ending capitalism are a majority socialist consciousness and workers democratically self-organised in a large-scale socialist party. Neither of which, unfortunately, existed in Argentina. Which is why the recuperated enterprises movement there has proved a dead-end and why the workers cooperatives it gave rise to are now forced to compromise and integrate themselves into capitalism to survive.

Saturday, September 17, 2011

Until Tomorrow

A 1961 sci-fi short story from the Socialist Party of Canada

"The destruction was so near complete that plant and animal life crept back over the earth slowly. The soil itself was to a great extent polluted by the fall-out. But that portion of humanity which escaped was truly fit, and brought with it memories, and a resolve never to repeat the fatal mistake of society divided against itself."

The speaker was Hubert Brodkin, venerable sage and keeper of the archives; the time, the year 1000 A.H. (after the holocaust); the place, Entrada Island, large western neighbor of a country once called Kanata. Professor Brodkin's listeners, several thousand in number, were gathered on the sea-shore and along the sandy estuaries of two great rivers; yet so near perfect was his voice transmitter that all could have heard had he spoken in a whisper. Behind them lay a lush land and all shared in common those things commonly used. There was plenty for all, with no rich, no poor, a fulfillment of the dreams of ancient dreamers called "Utopians," whose very names were forgotten.

"Warnings of the impending catastrophe," continued the professor, "were given about the year 1950, in what was then referred to as the 'Christian Era.' But the great mass of people were indifferent, and left all vital matters to those few who held them in complete subjection and who were spoken of as "experts." The particular economic and social period was described variously as 'Rugged Individualism,' 'Democracy,' and 'A Way of Life.' Five per cent of the population came into control of ninety-five per cent of the world's wealth, and so well did they command communication and silence opposition that the major portion of mankind was thought-controlled. It was a time of hand-clapping, of slogans, catch-words and phrases. Imitation came to be regarded as talent. Mouth-gurgling passed for music. From talking and thinking alike people began to look alike, to resemble in certain measure a famous dummy of the time called 'Mortimer Snerd.' And so tractable had they become that the dominant few, drunk with power and greediness could play with them as an angler plays with a hooked fish. This mass inertia tempted the world's dictators to lead it on into events so terrible that today's descriptions are dumb. People and records went down to destruction together, and what little I can tell you was passed on mainly by word of mouth from those few who survived to their descendants."

Here, onward, Professor Brodkin's style of speech became broken now and then by a slangy idiom echoing, so to speak, out of some forgotten time with which he alone seemed in tune:

"The circus began in this section of the earth after a number of sailing ships unloaded their razzle-dazzle biped freight. They struck a wild land inhabited by Primitives. Each ship's company consisted of a small number of Grabbers and a large quota of Goofs. The Grabbers were OK, they were wise cookies. The Goofs were everything else. Unlike Mother Hubbard, they were at once both poor and lacking in ambition. So long as they could eat, sleep, and breathe air in and out they were satisfied. The Grabbers sicked the Goofs onto the Primitives. The Goofs advanced in three columns. Some members of the first unit rode horses. Others bore guns, powder, and lead. Such gentry were described in a future time as 'Liberators.' Their combined attack appalled the Primitives who fought back as best they could with stone hatchets, bows and arrows. The front section of the second column carried a huge white cross on which the skeleton of a man was spread — this terrorized the Primitives. Now followed closely a group clad in long black coats, and carrying large books in their hands — these hypnotized the Primitives and softened 'em up for the third company. These sweet-scented gentlemen lugged kegs and jugs filled with a fiery fluid which sent the blood racing through the natives' veins, causing them to dance and whoop 'er up in wild fashion.

"Ground had now been broken for the Grabbers, who arrived plentifully supplied with mouse-traps, miscellaneous trinkets, and muskets made of cast-iron that later were to burst in the natives' faces. The Grabbers had an eye on four-footed animal skins in the possession of the Primitives. Spaniards called the procedure 'Negocio,' Englishmen dubbed it 'Business Incentive,' which term in after years was to ripen into 'Free Enterprise.'

"When the process of skinning the Primitives who had skinned the quadrupeds was well advanced and both were all but exterminated, the Grabbers divided the country amongst themselves, drove stakes and built fences around their allotments, then posted signs proclaiming this land is the private property of Grabber So-and-So and trespassers will be severely dealt with by virtue of 'Constituted Authority.' This latter sounded awesome to the Goofs, and since it was printed in large capitals they had not the temerity to question matters; especially when a number of the bigger Goofs were dressed in uniforms, armed, and sworn to obey the rules laid down by Constituted Authority.

"A 'Culture' period now followed in which the Goofs were taught to sing patriotic songs, and told how lucky they were to be living in Kanata. It was driven home to them how badly the Grabbers of other lands treated their Goofs.

"Then, when the landless, propertyless Goofs had no alternative, they made a deal with their overlords by which they (the Goofs) could live on the lands and do all the work, cut the timber, build the houses, grow the crops, raise cattle, build dams, factories, power plants; in brief, do everything necessary to keep the Grabbers in clover.

"The society developing out of this lopsided partnership became finally an insane mechanism in which the parts operated against the whole. Each family of Goofs desired the elimination of its neighbor. Each group hoped for the misfortune of other groups. Everywhere, individual interest took precedence over public good. The lawyer wanted litigations, particularly among the rich. The physician wanted sickness — he would be ruined if everybody died without disease. The military man wanted wars that would carry off half his comrades and secure him promotion; the undertaker wanted burials; farmers wanted famine to double, or treble the price of grain; the architect, carpenter and mason wanted conflagrations. It was truly each against all. The era was described by a noted philosopher, Bertram Dresser, as 'Graboofia.' Indeed it is to Dr. Dresser that we are indebted for much of the information handed down. And it all added up to a survival of the slickest.

"This charming result was affected by the Goofs surrendering to the Grabbers at the point of production their entire product, and receiving wages sufficient merely to restore the energy to work. Surplus values retained by the Grabbers had to be sold in order to provide them with profit, ease and luxury. Fully half the Goofs were now put to advertising and unloading the loot. But due to a world wide expansion of technology the Grabber gangs of most lands had surpluses to sell. Markets shrunk and rivalry between the great robber groups grew bitter. In the frantic search for trade they ferreted out all potential customers. It was at this point that propaganda ran rife and military build up sky-rocketed. It was a carnival of name-calling; when interests clashed the other fellow became a 'Red,' a 'Black,' a 'Blue,' or a 'Communist.' Each Grabber group would trot out some new weapon, expecting all opposition to collapse in fear; but instead, some one of them would come up with an even newer and better instrument of destruction. More than half the Goofs' labours were devoted to this end.

"From early youth Kanatan Goofs had been taught that one of their number could whip any six foreigners. Was not this well proven by that affair with the Primitives? True, the Goofs had stuck knives on the ends of their guns to avoid getting too close to the enemy with his short knife; but all's fair when glory is to be won!

"As to the Grabbers, they never intended to do any fighting, and had hideouts for themselves prepared in advance. And they planned all along to instruct their principal servants to prepare, in the name of Constituted Authority, documents ordering the Goofs to advance against their foreign counterparts whose own Grabbers had been designated as enemies. So powerful and so few in numbers had the world's Grabbers become, they could start and stop isolated wars at any time without those who fought knowing who was responsible. Surviving Goofs, returning victorious were rewarded with medals and cement monuments. and 'Remembrance' days. And they were a long time complacent. They believed the few in control of the earth were fearful of launching an all out chemical and germ war lest they themselves perish in the process.

"Step by step, many Goofs began to realize the sheer lunacy of Graboofia. They visualized a tomorrow, with a way of life where each against all had given way to a world of one for all and all for one. They realized they outnumbered the Grabbers 1000 to 1 and had the power to change the world, if they had the determination.

"But an effective job of head-fixing had been accomplished by the authorities through their control of the powerful means of spreading ideas; the schools, the church, the newspapers, the movies, the television. Those Goofs striving to change the world were pictured as enemies of individualism, free enterprise, liberty and democracy. Yet there were signs of rumbling and a growing awareness of a better tomorrow. Then somewhere, some one committed a 'hostile' act, and the terrible, indiscriminate destruction broke out. Unbelievable secret devices of death came out of concealment. Millions of men, women, and children were killed or maimed, blinded and rendered insane. A creeping death enveloped the entire earth. Almost everything wilted before it. Some of the people found refuge in caverns, others in sheltered nooks near sea-level. Communication, except the more primitive kinds and the printed word were lost as survivors slipped backward toward savagery. But the story of mankind before the holocaust (thanks to story-tellers like Dr. Dresser) was not lost completely, nor was the belief that some tomorrow would bring forth a fuller life."

As the professor's voice died away the Islanders rose slowly from the sands and headed homeward. The disappearing sun, seeming also content had painted the horizon a rosy red and bridged the sea-water with a streak of light which now retreated swiftly with the seconds, like the flashing smile of some departing guest —Link departed until tomorrow.


Tuesday, September 13, 2011

On the banks again

There are three main divisions within capitalist society which share the surplus-value which is socially extracted from the working class; the industrialist, the landlord and the banker. These divisions historically reflect the application of the division of labour to the specialised investment of capital in any field of production and distribution, any process of circulation, of which banking is part. Banks produce nothing. They are really middlemen or custodians of idle capital which must be available as a hoard, as potential money capital waiting to be put to use. Their profit is made during the process of circulation. The difference between finance capital and industrial capital is that the owner of money capital who wishes to earn interest on that money throws it into circulation not as capital for himself, but so that others can use it; and consequently gains a profit by this service.

Contrary to popular belief, banks do not dominate the capitalist system (The two largest corporatrions in the world are WalMart, bigger than the Pakistan and Exxon bigger than the New Zealand economies). In the list of companies by revenue size the first financial business enterprise to appear is Fannie Mae at number number 16. This mistaken view is due to the fact that wealth is represented by enormous quantities of money. All wealth under capitalism expresses its value in the symbolic money form, but that form tends to conceal the fact that capital exists in the physical implements of the labour, factories, minerals, buildings, ships, etc. If for some reason, whether it be that the market is already overloaded and cannot absorb further commodities, or that over-production has already taken place, then production will be scaled down, curtailed, or in some cases halted entirely, and workers will be laid off. In these circumstances there will be little prospect of profit, and as experience has shown a number of capitalists, the smaller ones, go bankrupt All the machinations of the banks, either by advancing or retarding credit, whether charging low interest rates or not, cannot alter this. At the moment there is no shortage of cash available for investment. However, in a failing market there is little incentive to the industrial capitalist to commit himself to paying interest when the prospects of earning surplus-value on the borrowed money are extremely remote.

Speculation basically involves buying cheap and selling dear. When it comes to banking, what banks are doing is borrowing money cheap and lending dear, pocketing the difference as profit. Basically the same as any merchant who buys below value but above the cost-price of the producer of the commodity, and then sell above their own cost-price. There is nothing very specialk about banks; they are not wicked finance capitalists against whom the anger of workers should particularly be directed, just capitalists with their capital invested in a particular line of business, no more nor less reprehensible than the rest of the capitalist class.

Banks lend money and charge interest on it, but they don't create this money themselves but many have come to accept a myth that banks can create money "out of thin air." No, they can't. They can only lend out either what has been deposited with them or what they themselves have borrowed on the money market.

True, they don't have to hold all of this as cash, but only a very small proportion, as little as 3%. There's nothing dubious about this. It's what banks do - lend money that people and firms don't want to spend for the moment to those who do want to, and making their profit out of the difference between the rate of interest they pay depositors and what they charge borrowers. It is quite true that banks do not have to retain all the money deposited with them in the form of cash. If they did, they would never be able to make any profit, since it is only by re-lending, at a higher rate of interest, the money they have in effect borrowed from their depositors that they make profits. It does not mean that they can lend out many times any amount borrowed by or deposited with them as cash, raking in the interest. It means that they can only lend 97 per cent of this amount.

The money lent, obviously, is spent on something, the proceeds of which ultimately end up back in the banking system and are then available for lending all over again. This is not creating new money out of nothing. It is re-lending already existing money. If the money lent does not return to some bank when spent - and so become part of its assets - then no more loans can be made. So, banks cannot lend out more than they have.

Derivatives, collateral debt obligations and the rest are not relevant here as they are not bank loans or money. They are what Marx called "fictitious capital" - ie the conversion of a stream of interest into a notional capital sum which can be bought and sold. Packaging and selling these was an alternative to lending at interest that the banks found to turn a profit. According to Marx the securities themselves really have no value and represent nothing more than a legal claim to a portion of future surplus-value. So any sale of these assets (at any price) represents a transfer of value from buyer to seller, although assuming that there is no default on the asset it will serve to eventually increase the amount of value in the hands of the buyer. The owner of a financial asset records the asset in his books as if it had a value just like any other commodity. This turned out to be disastrous when it was discovered that the stream of interest was also in many cases fictitious.

If there is one lesson of the current financial crisis it is that banks can only lend out what they have borrowed either from depositors or from their own borrowing on the money markets. It was an over-reliance on the latter that largely led to the collapse of Northern Rock and the near collapse of so many other banks. If banks could really create vast quantities of credit at "a stroke of a pen" then none would ever go bust. Neither would they need to tap the money markets for funds.

The second and most important function of the banker is to provide money for industry, which is capital. This has a separate function from money as the medium of circulation. The function of capital is not merely the circulation of commodities but their production in the first instance. Therefore, money used as capital is withdrawn from circulation because the wealth which it represents has been locked up in the process of production. The credit system of advancing capital allows individuals to use capital which is not theirs, and has opened the door to all sorts of swindles and reckless speculation. Who would not gamble with other people's money?

Credit creationism is a myth first given respectability by the 1931 MacMillan Report on Finance & Industry, though a significant minority of economists, bankers and trade unionists on the MacMillan Committee rejected it, while others later got cold feet when the implications of what they had signed up to became evident. It didn't stop a version of it (later highly amended by Samuelson and others) entering into standard economics textbooks.

One of the origins of the banking system was the practice of depositing money for safe keeping with the goldsmiths and paying them for this service. The goldsmiths subsequently adopted the practice of paying interest to the depositor, and they re-lent the money at a higher rate of interest to a borrower. This was only an indirect way of the depositor himself lending his money at interest to the borrower. Whether the goldsmith acted as intermediary or whether the lending was done directly the general effect was the same, i.e., the owner of the money (representing a command over goods) was lending it to a borrower, who would thus, for a specified time, have at his disposal the means of buying goods. It was not an act of “creating” goods or values, but only of lending them, the banks being intermediaries between lenders and borrowers. Fundamentally, the same process underlies the modern banking and credit system. Many proponents of the credit creation myth repeat the goldsmiths allegory as proof of creating money "out of thin air" but as this more or less contemporary account makes clear there is nothing about the goldsmith banker being able (or even trying) to lend more than the 100,000 ounces of silver deposited with them, as often ascribed in the many web accounts.

It's from Richard Cantillon's "Essai sur la nature du Commerce en General" written in 1730. Here's what he wrote:

"If a hundred economical gentlemen or proprietors of land, who put by every year money from their savings to buy land on occasion, deposit each one 10,000 ounces of silver with a goldsmith or banker in London, to avoid the trouble of keeping this money in their houses and the thefts which might be made of it, they will take from them notes payable on demand. Often they will leave their money there a long time, and even when they have made some purchase they will give notice to the banker some time in advance to have their money ready when the formalities and legal documents are complete.
In these circumstances the banker will often be able to lend 90,000 ounces of the 100,000 he owes throughout the year and will only need to keep in hand 10,000 ounces to meet all the withdrawals. He has to do with wealthy and economical persons; as fast as one thousand ounces are demanded of him in one direction, a thousand are brought to him from another. It is enough as a rule for him to keep in hand the tenth part of his deposits.
There have been examples and experiences of this in London. Instead of the individuals in question keeping in hand all the year round the greatest part of 100,000 ounces the custom of depositing it with a banker causes 90,000 ounces of the 100,000 to be put into circulation. This is primarily the idea one can form of the utility of banks of this sort. The bankers or goldsmiths contribute to accelerate the circulation of money. They lend it out at interest at their own risk and peril, and yet they are or ought to be always ready to cash their notes when desired on demand. If an individual has 1000 ounces to pay to another he will give him in payment the banker's note for that amount. This other will perhaps not go and demand the money of the banker. He will keep the note and give it on occasion to a third person in payment, and this note may pass through several hands in large payments without any one going for a long time to demand the money from the banker. It will be only some one who has not complete confidence or has several small sums to pay who will demand the amount of it. In this first example the cash of a banker is only the tenth part of his trade."

Cantillon's full account of how the banks of his time operated can be found in Chapter VI

What is of significance for those who describe thmselves as socialists yet espouse the idea of credit creationism is that runs counter to one of the basic precepts of Marxian economics, namely that value arises in the sphere of production not circulation. If banks could create credit with the stroke of a pen, that would mean in effect they could create wealth, and consequently the Marxist Theory of Value would be shown to be wrong. However, as time passes the validity of the Labour Theory of Value, i.e. that wealth can only come into existence when men apply their energies to nature, is all too apparent. If credit creationism were true, the solution to society's problems would indeed be monetary reform, not socialism - exactly the sort of argument put forward by Major Douglas in the 1930s (see below) to the American libertarian anti-fed reserve conspiracy theorists of today.

The confusion about the role of banks in creating money arises partly because of a lack of clarity as to the nature of money. Money is anything that people are prepared to accept as money and which circulates freely. As youngsters we get to play with toy money. This works perfectly well within the confines of play because players accept it as money and it circulates freely between them. The Bank of England's official measure of the money supply employs a number of different definitions leading to a number of different totals. M0 comprised sterling notes and coin in circulation outside the Bank of England (including those held in banks’ and building societies’ tills), and banks’ operational deposits with the Bank of England. On the narrowest definition the new bank deposits that arise as a result of banks lending money to customers do not count as money. On broader definitions they do. Keynesians and the Monetarists include "bank deposits" as money and that this confuses the issue. Especially as even the term "bank deposits" includes two entirely different types. Most people will interpret the term "bank deposit" to mean money that someone has and that they deposit in the bank, ie in effect lend to it even if they are not paid any interest (but are granted free banking in lieu of this). But the Keynesians and the Monetarists also include as bank "deposits" loans made by banks which take the form in effect of a credit line on which the borrowers pay interest to the banks. So, they mean by "bank deposits" both money that is lent to the banks and money that is lent by them. This involves double counting as some of the money that the banks lend will come from the money that has been really deposited with them.

The continuous concentration of money capital into banks and the expansion of the credit system allows a great number of transactions to take place without the mediation of any money. This is due to what Marx calls the mutual settlement of accounts. If there is a series of exchanges based on credit such that Capitalist A owes £500 to Capitalist B, and Capitalist B owes £600 to Capitalist A, the only amount of money necessary to realize the £1100 of commodities is a £100 -- the £500 owed to each (£1000 in total) are simply canceled on the books and no money is necessary to intervene in the realization of this portion of the value of the commodity capital. The amount of actual money intervening in giant purchases is surely very small. The bulk of purchases take place against credit, where the mutual settlement of accounts is always possible. The move towards a "cashless society" , debit and credit cards, can be seen as increasing the velocity of circulation of the currency.

Ultimately money will only be acceptable and circulate freely if people using it have confidence in it. That is why, for so much of modern history, money has either contained precious metals or has been a token representing a call on precious metals. Today a country's currency depends not on how much precious metal backs it up, but on how productively powerful its economy is.

The one institution which appears to create credit is the State, operating through the Bank of England. This is an act of deliberate political policy. The Government, in a variety of ways, instructs the Bank of England to print an excess of paper currency, which the Government uses to finance its own schemes, and without having to introduce tax legislation to deal with particular cases. This inflation of the currency does not, nor cannot, add to existing wealth. What is really happening is that, far from creating credit, the Government is confiscating other people's. This has the same effect as a general increase in taxation. The constant dilution of the purchasing power of money by inflation raises prices and dislocates production and distribution. This is public fraud posing as public credit.

Socialists have no love for banks. A world without banks would be a wholly better place. However to blame the banks for creating our debt-ridden society is just too biblical, like a re-run of Christ expelling the money-changers from the temple. Even if the banks were state-owned, they would still have to lend. If they didn't there would be no point in them existing. Banks and interest are not the villain of the piece but capitalism and production for profit. We need to abolish money before we can get rid of banks. But to get rid of money we need an end to property. And you can't abolish property relations until you abolish capitalism.

Historically, we have the Douglas Scheme of the 30s which did cast the banks as the villain and variants of the belief frequently spring up.

The Social Credit movement was started by Major Douglas whose argument was that there was a ‘chronic shortage of purchasing power’ due to the issue of money being in the hands of banks that had a vested interest in keeping money in short supply so as to be able to command a higher rate of interest on the money they lent out. Although, according to Douglas, banks had the power to create credit with the stroke of a pen they generally chose not to do so; this power should therefore be taken from them and vested in some public body which would make this extra purchasing power, supposedly needed to ensure the full use of productive capacity, available to all in the form of ‘social credit’. Take this power out of the hands of the banks that they use for their own special benefit, and transfer it to the Government and with this power, it can issue certificates, based on the national wealth, entitling all citizens to a share of the goods so abundantly produced in this age of plenty. Thus, the working class will get a greater portion of the wealth it produces, and the petty bourgeois will get a greater portion too, but what is more, though this is not explicitly stated, the small businesses will escape the clutches of its arch enemy ... the financial institutions.

Marxian economics constitute a direct refutation of the illusions up on which Social Credit doctrines are premised. Not only did Marx demolish the "credit creation" theories but this was already a hoary fallacy when John Stuart Mill disproved what he described as this "confused notion" in a work written before 1847 and published' in 1872. The notion that an insufficiency of money was the cause of sluggish trade was criticized by Sir Dudley North in 1691 before the development of the modern credit system and this was quoted by Marx.

Among other things what this theory overlooked from its deficiency of purchasing power standpoint was that interest charged by banks to capitalist firms is not an additional amount that is added to prices and which therefore cannot be paid for out of current income (wages and profits) generated in production. It is instead a part of the surplus value which the industrial capitalist has to hand over to the banking capitalist for the loan of their money and so is already included in total purchasing power.

It is as we shall see, an inadequate conception of the function of money and its relationship to commodities that underline Social Credit proposals. Money was shown by Marx to be, like labor power itself, also a commodity. Gold, or any of the previous materials that assumed the money form, did so, first of all precisely because they are commodities, and hence depositaries of exchange values. One of these commodities by general usage and agreement becomes the money commodity. By virtue of having the attribute common to all other commodities, of being the embodiment of so much labor time, the money commodity thus becomes the general equivalent and measure of value of all the other commodities. Money emerged and acquired its function of medium of circulation as a product of the historical development of exchange. The primitive inter-tribal direct barter beginnings of exchange was only of an occasibnal and non commodity nature since in primitive society goods were not originally produced for exchange, or sale. But occasional barter between one tribe and another developed into a more sustained form and provided an impetus to the development of the private property institution. Goods became more and more produced for the purpose of exchange, rather than for the personal use of the owners. The beginnings of commodity production and exchange, the production of goods for sale, demanded the use of one commodity as the universal equivalent which would serve as the translator of the values of all the others. It will be seen then that exchange did not originate with money but that the converse is true; i.e. that money arose as a medium of circulation only as a result of the circulation of commodities. At this point let us allow Marx to speak. "Although therefore the movement of money is merely an expression of the circulation of commodities it seems as if conversely the circulation of commodities was only an outcome of the movement of money. On the other hand money only has the function of a medium of circulation because it is the objectivized value of commodities. Consequently, its movement as circulating medium, is in actual fact only the movement of commodities under changed forms." (Capital, vol. 1.) Purchasing power resides in the goods which when produced belong to the capitalists. Gold, which was the actual material medium of circulation in earlier times, was with the rise of banking superceded in that function by the development of tokens and of paper representatives, which were convertible into money. Today banknotes and other paper are no longer convertible into gold. Nevertheless gold remains the money commodity since it still functions as the measure of value and as world money.

The commercial credit which the capitalists engaged in reproduction extend to one another by means of the promises to pay, constituted by bills of exchange and other certificates of indebtedness, is the basis from which the modern credit system developed. Banks are the intermediary agencies which facilitate the exchange of goods between the various owners, whereby one set of ccmmodities is sold for another. They act as middlemen between buyers and sellers who are each both borrowers and lenders in turn, since every seIler must also be a buyer before he can seIl. The seIler on depositing the purchaser's check is in reality ordering the bank to collect the debt; to transfer this amount from his debtor's account to his own. When his own debt to another seller is due his check issued to this creditor is in essence an order on the bank to transfer the stipulated amount from his own account to that of the creditor's. "These mutual claims of indebtedness represented by bills of exchange or checks are balanced either by the same banker, who merely transcribes the claim from the account of one to another, or by different bankers squaring accounts with each other." Checks, being orders to pay money are therefore certificates of indebtedness. Banks are institutions for the transference of debts and purchasing power which arise from the sale of goods and services. The issuance of a check is the conversion of commodities into a form of credit money and if cashed, into another form of money, banknotes. Thus we see, contrary to Social Credit dogma that banks cannot create credit from nothing since it is the creation and sale of goods that create credit. Purchasing power derives from the ownership of goods and the consequent command of services and must therefore always be equal to the totality of goods on the market.The bank too occupies the dual position of being both debtor and creditor since it lends out at a higher interest rate the great part of the deposits it has borrowed at a lower rate. This is generally the source of its profits.

The total product of society (minus that portion necessary for the replacement of used up means of production) can be said to resolve itself into income of wages, profits and rent (including money rent) although value is not determined. by these elements of income. The A plus B theorem of Major Douglas, founder of Social Credit, is supposed to demonstrate that A payments for wages and dividends, plus B payments for raw materials, bank charges etc., comprise the cost of production, while only A gives rise to income. Therefore, says Douglas, B payments must Iead to a shortage of purchasing power. But this is fantastic nonsense, aside from regarding dividends as a cost as it can readily be seen that the cost of raw materials has already been included when dividends have been disbursed. Also considering category B it will be realized when viewing the process of production in series that the raw materials of one industry is the product of the previous producers and this product produced the distribution of wages and profits. By adding the cost of production twice and thus doubIing it Social Crediters have certainly merited the description of their propaganda as double talk and this is the twaddle that is passed off as economics. The total income of society can never equal its total product since a part of this product, which represents no profit, must be used to replace the constant capital consumed (means of production). But this does not mean that the result is a lack of purchasing power.

see here
And its resurgence