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Cooking the Books 1: That was then

That was then

In the mid-1980s unemployment was at its highest level since the 1930s. It was then that a newly elected young Scottish Labour MP decided to turn his university thesis into a book called, simply, Maxton, about James Maxton, a leftwing firebrand who was the leader of the now defunct Independent Labour Party in the 1920s and 30s.

The author showed a wide knowledge of the history of the working class movement in Scotland, discussing syndicalism, De Leonism, Leninism, Trotskyism and the like, as well as indicating that he had read some Marx. He showed a particular interest in the programme for dealing with unemployment that Maxton and his fellow Red Clydesider John Wheatley had worked out in the 1920s, and which they presented as a “middle way” between “MacDonaldism” (the inevitability of gradualism) and “Communism”.

“Even before MacDonald became Prime Minister, the Clydesiders had come to two conclusions. The first was that the main reason for unemployment was the lack of demand within the British economy and that only increased working-class purchasing power could remedy this. The second was that . . . [the] Government must plan and control imports and exports in the national interest.”

The author described this programme as “credible” and a “socialist way of spending out of a slump”. The clear indication was that something similar was the way to end the unemployment and poverty of 1980s Britain. The author was one Gordon Brown, who later moved on to higher things.

Of course it wouldn’t have worked. Slumps are not caused by “underconsumption” by workers. Marx had already dismissed Maxton’s – and Brown’s 1980s – solution:

“It is pure tautology to say that crises are provoked by a lack of effective demand or effective consumption . . . The fact that commodities are unsaleable means no more than that no effective buyers have been found for them, i.e. no consumers (no matter whether the commodities are ultimately sold to meet the needs of productive or individual consumption). If the attempt is made to give this tautology the semblance of greater profundity, by the statement that the working class receives too small a portion of its own product, and that the evil would be remedied if it received a bigger share, i.e. if its wages rose, we need only note that crises are always prepared by a period in which wages generally rise, and the working class does receive a greater share in the part of the annual product destined for consumption. From the standpoint of these advocates of sound and ‘simple’ (!) common sense, such periods should rather avert the crisis”
(Capital, Vol 2, chap. 20, section 4).

Governments cannot spend their way out of slump. Slumps end when wages and capital values fall enough to increase the rate of profit again. All that governments can do is to help this process. The Labour leaders who Maxton – and Brown – criticised, Ramsay MacDonald and his Chancellor of the Exchequer, Philip Snowden, accepted this. Their argument was that, without a mandate for socialism (even in the confused and mistaken Labour Party sense), all a Labour government could do was to manage capitalism – on its terms. Which was true and what they tried to do.

When Brown himself became Chancellor in 1997 – less than ten years after the publication of the paperback edition of his book – he behaved in the same way as Snowden (who went over to the Tories with MacDonald in 1931), not Maxton, would have done. Facing with the task of managing capitalism, he too was a pillar of financial orthodoxy, prudent and an economic liberal, giving priority to profit-making. Perhaps when he retires he’ll write a book called Snowden.