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Capitalism - Waste and Want

Misusing world resources

One speech for which Enoch Powell is not quite so famous is the one in which he gives vent to his fervent faith in the basic virtue and inexorable efficiency of the capitalist system. It seems, when Powell is talking in this vein, that he has a dream about what he thinks of as pure capitalism, in which the profit motive and the whole business of buying and selling are left to work their ways undisturbed by such things as state intervention, union bargaining power and so on. He thinks that the system of commodity production has such eternal sanity that, left to itself, it will solve all problems — housing, health, economic crises and the like.

Powell is an extreme case but he uses a logic which, although it seems macabre, is consistent enough to anyone who accepts the basis of capitalism. What of these, the less extreme? Every supporter of capitalism must to some degree argue that the system is basically efficient. Even the problems they admit to must have a solution which is never more ambitious than a juggling with, or a deflection of, the profit motive; they can never actually question that motive. Hence the policies, typical of such as the Labour Party, of subsidies for houses, food, transport and so on. These subsidies are of course supposed to stimulate the production of goods; there are others, also inspired by the profit motive, aimed at promoting the non-production of goods. Both, apparently, are examples of the efficiency of capitalism.

What we are concerned with here is the notion that capitalism works, in terms of the efficient production and distribution of wealth and of the satisfaction and happiness of its people. There are two ways of approaching this. The first is to look at examples of inefficiency so blatant that even supporters of capitalism consider them fit subjects for protest. By examining the background reasons for these we can broaden our view, taking in examples of inefficiency and wastefulness which probably only socialists would regard as scandalous.

Every so often the communication media become fascinated by some spectacular revelations of especially obvious waste. It is about ten years since Vance Packard's The Waste Makers burst upon us, crammed with details of what was succinctly called planned obsolescence. Packard showed how firms make inferior goods, goods designed to wear out relatively quickly so that there might be a market for new ones. He told of portable radios, car silencers, television sets which their designers knew could easily be made to last a lot longer. He also gave evidence of manufacturers regularly changing styles, once more to stimulate the market by persuading buyers that their present model was no good because it was out of fashion. Who wanted to be seen driving last year's car? Looking at an old-look telly? Better buy a new one, keep up with the times.

Perhaps many of the readers of The Waste Makers hoped that it would have the effect of raising production standards. They were wrong. As anyone who buys a car or a TV set or something similar knows, waste is still being busily made in the factories. Any reader of the consumer reports can testify to the fact that obsolescence is still on the factories' planning schedules. One small example of this came to light last September. It concerned a skilled joiner, an old man who had been sacked—not because he was a bad worker or a poor time keeper or anything like that. He was sacked .because his work was too good to be profitable. A director of the firm concerned said:

“There were no complaints about Mr. Welch's work. He was a first class joiner, but he was not prepared to use modern methods of work. His unnecessarily high standard meant that the company could not make his work pay.” (Daily Telegraph, 16 September 1969)

It is easy to imagine the frustration of a skilled worker in this situation. Then what about the similar feelings of, say, farm workers who watch fertile land being taken out of production in the knowledge that starvation, even famine, is one of the world's serious problems? It will surprise some of those who are starving, to learn that there is a "glut" of wheat in the world, that leading wheat exporting countries are trying to reduce their "surpluses", that in America the government has just imposed the third successive cut back in production and has once more increased the financial inducement to take wheat acreage out of cultivation. All the cloudy jargon used to justify this policy can be reduced to one single sentence. Capitalism is here deliberately wasting human and natural resources.

If famine is a touchy, well-publicised problem, so is housing. We are all .familiar with the apparently insurmountable obstacles which are in the way of providing decent homes for everyone; we have all heard the politicians and the businessmen telling us about the chronic shortage of materials and resources. This might sound more convincing were it not for the fact that, when there is money to be made by doing so, building materials and labour — even completed buildings — are left unused.

Consider the case of Harry Hyams, one of London's great property "developers" who, according to the Daily Telegraph (27 June) "controls enough empty offices to house 10,000 workers—11 million sq. ft." Among the empty Hyams properties are: Centre Point (32 stories, 300,000 sq. ft., empty since 1964); Space House (237,000 sq. ft.); London Bridge House (155,000 sq. ft.). It is no accident, that these buildings are unused. In the past year Central London rents have more than doubled — and as long as rents keep rising faster than interests rates it is actually profitable in the long run to let such buildings stand without tenants. Three years ago Hyams' fortune was assessed at £27 million; since then, says the Telegraph, it has "inflated like a gas balloon". Let us be clear that this vast fortune has been amassed partly as the result of a deliberate, planned, organised waste of resources and materials and of human abilities—at the same time as there are millions of people whose housing conditions give them a desperate need for those resources and abilities.

It would be possible, as Vance Packard and others have done, to write a book about such waste. The vital point here is that it is all caused by the simple fact that capitalism produces its wealth not for use but for profit. If Harry Hyams could make another £27 million by building houses and giving them away he would do so. But he, like the wheat farmers of America, like the car and TV makers, like the joinery firm, can actually make more profit by waste. And after all making profit is all that capitalism demands.

This is the thread connecting us to the second part of our case—the part where no breath of popular indignation is ever felt. It is not enough to say that capitalism makes money from waste. The fact is that, unless it wastes a tremendous amount of energy and material, the system simply would not function.

Let us take a look at the way capitalism has to organise its manpower. In this country there is a working population of about 25 million. Some of these are engaged in productive work, some of which is even essential and non-wasteful. But others are doing wasteful unproductive work which is necessary only to capitalism, only needed in a society where goods are made to be bought and sold, in a society with money, with a privileged class and laws to protect those privileges. Here are some figures for those engaged in certain occupations, all of which come under the above descriptions:

Insurance, banking, finance and business services: 892,700

Armed Forces 377,000

Police 99,135

Wholesale Distribution 545,000

Retail Distribution 2,008.000

Clergy, Ministers, Members of Religious Orders 39,520

Judges, Barristers, Advocates, Solicitors 35,490

Most of Capitalism's supporters (which means most people) although they may kick against the waste built into a shoddy car, or into an empty building, think that bank clerks, soldiers, clergymen are necessary. The same way of thinking leads them to approve of the way capitalism tries to solve some of its economic problems. We have already seen how governments will stop wealth being produced, in the interests of profit. They also sometimes try to stop it being distributed.

Currently the American government is raising a storm by its intention of imposing a series of import restrictions, designed to keep some foreign produce out of the country. At present this is confined to some textile goods but other commodities—the rest of textiles and shoes, for example—may be included later. It is not especially relevant to this article that this policy is a direct reversal of the American advocacy of freer trade of not so long ago. The point at the moment is that the goods America is trying to keep out might well be better and cheaper than her home produce. But capitalism cannot apply such standards of judgement; the idea of protectionism, like all the measures which governments take, is to protect—protect profits. In that quest capitalism will actually bolster and protect inefficiency; at one time it will stimulate the movement of wealth, at another stifle that movement.

The patent laws are another way in which the profit motive stifles production. Patents are themselves restrictive, confining the production rights of something which might be better and more efficiently produced elsewhere. In some cases patent rights actually work to stop production. The original patent for stereo recording was taken out in 1931. It was soon acquired by some American companies who, seeing stereo as a threat to their established products, use the rights to prevent production. By the late fifties a glut of hi-fi was threatening the market with stagnation. It was then that stereo was released—almost thirty years after its invention—in an effort to stimulate the market anew and so revive some ailing balance sheets. Needless to say, when it was released the event was heralded as a great step forward in human progress. What other ingenuities, one wonders, are mouldering in pigeon holes, market "Not to be Opened until More Profitable."?

Socialists are hardened by now to meeting the opinion that the system of production for profit is essentially sane and efficient. The opposite is true; in this article we have looked at only the tiniest fraction of the evidence which says that capitalism wastes its wealth and its abilities. The profit motive cannot work efficiently. Capitalism cannot cater for the needs of its people. It produces waste and it produces want and both are profitable only to the minority who hold positions of privilege.