Book Reviews
Contents:
No logic
Fences and Windows. By Naomi Klein. Flamingo, 2002.
The protests in Seattle, London, Genoa and many other places between
1999 and 2001 gave rise not just to labels such as J18 but also to a
widespread movement known variously as anti-corporate,
anti-globalisation and even anti-capitalist. Naomi Klein's book No
Logo came to be seen as a manifesto for this movement, and Klein
herself as a spokesperson for it, despite her protestations to the
contrary on both counts. No Logo (on which see the Socialist
Standard for December 2000 and August 2001) chronicled the rise of
massive global companies such as Nike and McDonalds, and of resistance
to them. Klein's latest book is explicitly not a follow-up to her
earlier work, though inevitably it deals with similar issues.
Fences and Windows consists of a selection of Klein's journalism
and speeches, mainly from 2000 and 2001, and this is both its strength
and its weakness. It gains immediacy from having been written in the
midst or the aftermath of demos, protests and large-scale discussions,
but lacks any overall theme or coherence. Nevertheless, a number of
topics that it deals with can be singled out. The fences of the title
are the (literal and metaphorical) barriers that prevent people from
protesting, from using various resources and from gaining access to
education and so on. And the windows are the various kinds of
opposition, from mass efforts at direct democracy to landless Brazilian
farmers cutting down fences around unused land.
A chapter written in Prague is interesting for what it reveals of the
views of many young Czechs. They see both capitalism and “communism”
(read: state capitalism) as centralising power in the hands of a few
and of treating people as less than fully human. The issue is not
whether the state or multinationals are in power, but of how power is
distributed. As argued in other pieces, poor countries are required to
follow the economic rules laid down by the rich – who then disregard
them themselves when they see fit. Post 9/11, even Canada has been
forced by the US to toughen security at its borders, and give up a
great deal of control over them to US security officials.
The power-holders have of course not just sat idly by while the
protesters make their protests. As a way to avoid the objectors, they
have moved some of their meetings to virtually inaccessible places.
More worryingly, protest and dissent have themselves been criminalised,
with police violence becoming more or less the norm, with prominent
resisters being arrested on trumped-up charges and so kept out of the
way during demonstrations, and with all civil disobedience being
equated with violence. (This has become worse since the invasion of
Iraq, especially in the US, with any protest regarded as helping “the
nation's enemies”.)
The final section of the book turns to positive proposals. A chapter
entitled “Limits of Political Parties” attacks the New Democratic
Party, Canada's nearest equivalent of the Labour Party (Klein is
herself Canadian, and this piece originally appeared in a Toronto
newspaper). Klein notes that the most socially excluded parts of
Canada's population support “an idea entirely absent from the
mainstream left: a deep distrust of the state”. While the NDP advocates
strong interventionist central government, a true left-wing party
should “articulate a different vision, one founded on local democracy
and sustainable economic development”. The last chapter proposes a
merger of two forces, international anti-globalisation activists and
community-based organizations.
But there is still no real picture of a society to replace capitalism,
or of what the real implications of local democracy and sustainability
might be. These cannot be valued or implemented in a world divided
along the lines of class and nation, where profit is the priority. A
thoroughgoing change to a world without classes, nations, governments
or profit is needed. Sadly, Klein and the rest of the
anti-globalisation movement, despite the sincerity and effectiveness of
much of their critique of capitalism, have taken the first steps but
have yet to see through to the genuine alternative.
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Capitalist economics
Free Lunch. Easily Digestible Economics.
Why there's no such thing as a free lunch.
By David Smith, Profile Books. £8.99
This book, written by the Economics Editor of the Sunday Times,
aims to give a readable account of what economics – modern bourgeois
economics, that is, of course – says, directed mainly, it seems, at the
sort of people that invest some of their savings on the stock exchange
and want to know about the wider factors that can influence their
“investments”.
Modern bourgeois economics tries to explain economic phenomena without
any concept of “value”, and it is this that makes it inadequate. For
instance, to argue that price is determined by supply and demand, an
argument Smith repeats, doesn't get you very far since it does not
explain why the price at which supply and demand balance for one good
is different from what it is for another. This can't be explained
without introducing the concept of “value”, as was well understood by
the first bourgeois economists, Adam Smith and David Ricardo, whose
views Smith discusses.
It is the same with explaining the origin of profits. It is all very
well saying that, to maximise profits, a firm will, or should, go on
producing until the marginal cost of its product equals the marginal
revenue obtained from selling it. But this doesn't explain profits. It
doesn't explain why “revenue” should include an element of profit
rather than merely being enough to cover costs. Here again, the way out
is to use the concept of value and, in this context, surplus value.
Smith's attempt to explain Marx's labour theory of value is pathetic.
He attributes to Marx the view that the value of a product is
determined by the labour cost at the last stage of its production.
Thus, the value of a television set would be equal to the wages bill of
the factory where it was produced. Obviously, he has no trouble
demolishing this absurd view. In fact, Marx followed Ricardo in saying
that the value of a product was determined by the amount of (socially
necessary) labour incorporated in it from start to finish – from raw
materials to finished product, ready for sale – and not just at the
last stage. Smith, incidentally, omits to mention that both Adam Smith
and David Ricardo adhered to a labour theory of value, even though a
less coherent one than Marx's.
Smith makes Marx explain profit as something that “capitalist
exploiters” simply add to the labour cost of the product. This was not
Marx's view, but at least it would be a theory of profit, albeit a
mistaken one; which is one step ahead of Smith and modern bourgeois
economists generally who offer no theory at all as to the origin of
profit.
Ironically, although modern bourgeois economists try to operate without
a theory of value, Customs and Excise has re-introduced the idea and
the term via “value-added tax”. This is a tax levied on the difference
between the price of all the material inputs at any stage of production
and the price at which, after being worked on, it is sold on to the
next stage. This difference is officially called “value added” and in
fact consists of the wages and salaries paid to the workers and the
profit of the employer. And it does correspond (more or less) to what
Adam Smith, Ricardo and Marx meant by new value created during the
process of production. For Marx (though not for the other two), the
wages/salaries part of “added value” would represent the value of the
labour power the workers had sold to their employer while the rest,
still part of the new value they had created, would be a “surplus” over
and above this – surplus value”, therefore – pocketed by the employer
as profit.
When explaining Gross Domestic Product (GDP) and related concepts Smith
mentions that some people “prefer to talk, not of GDP, but of 'gross
value added'”. It's a pity a lot more don't share this preference, as
it brings out more openly that profits derive from the new value added
by the wealth-producers in the course of producing some good or service.
After pointing out that in the UK in 2000 consumer spending represented
63 percent of GDP, Smith says that this means “consumers drive our
economies”. But this does not follow. Nor is it the case. It is merely
part of the ideology used to project capitalism as a system geared to
meeting consumers' needs. Smith himself knows full well that a
capitalist economy is not “driven” by consumer demand but by other
factors, essentially the 17 percent of GDP represented by “investment”,
i.e. reinvested profits, the part of surplus value that is accumulated
as capital. After all, this – capital accumulation – is why capitalism
is called capitalism.
Smith drops the pretence that “consumers drive our economy” when,
later, he discusses growth and the business cycle. On growth, he
writes, one expert (Maddison):
“has produced results that suggest investment other than in housing is
the most important source of growth, with significant contributions
also made by rising educational standards, trade and, for most
countries, a 'catch-up' effect as they adopt the technology or methods
used by countries with higher productivity levels. Extra investment,
the main source of growth, does not always flow smoothly. It is subject
to – indeed is one of the primary causes of – the business cycle”.
On business cycles themselves, he mentions another theory that “the
traditional Keynesian solution of trying to prevent recession by
increasing government spending is misplaced”.
If he had read his Marx, he would have realised that Marx got there
first, explaining that capitalism is driven, not by consumer demand,
but by the drive to make and accumulate profits as further capital and
that this is by no means a smooth process.
Smith, however, doesn't get everything wrong. He realises that
“inflation” is not just any price increase but “a general increase in
prices” and also that banks can't create credit by the stroke of a pen
but “have to ensure that their deposits and loans are in rough balance”.
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