ALB
Forum Replies Created
-
Posts
-
Good idea. I think he is based in Goldsmiths college (yes, that’s its name and who endowed it) which is not all that far from our Head Office. Could be an entertaining as well as an educational evening. Writing off for a review copy anyway.
I can’t think what possessed the Independent to devote so much space and publicity to an exposition of the purest currency crankery. Mosse seems to be an unthinking follower of the notorious currency crank Richard Werner. Werner is on record as claiming that, if banks’ loans can be 10 times their cash reserves, this means that when somebody deposits £100 in a bank that bank can then lend £900 whereas in fact it means they can lend only £90.
M4 is a measure of total bank lending and is only called “money creation” because making a loan is, misleadingly, defined as creating money. This is misleading as it suggests what is lent is not purchasing power that already exists but new money that is created from nothing. And is believed by economic illiterates like Mosse on the say-so of cranks like Werner.
Mosse’s recounting of the Goldsmith’s Tale is all wrong. For a start, at the time the currency was silver and that not gold was what was “usually” deposited with them; their deposit certificates never became “the generally accepted means of payment”; and none of them took the risk of committing the foolhardy business practice (and criminal act) of issuing more certificates than the value of the silver deposited with them.
These mistaken views are refuted in detail in chapters four and five of our pamphlet The Magic Money Myth.
Mosse blames the banks for resources being devoted to what is most financially profitable rather than to what is socially needed. This does happen of course but it is the result of private capitalist firms aiming to maximise their profits. It is capitalism operating normally. Banks don’t cause this; they only channel spare capital towards it. So, restricting their lending won’t end this. In fact, it would probably — no, certainly — spark off a huge economic crisis. One good reason not to vote for the Green Party which swallows this nonsense too — they might even try to implement it.
Yet another experiment in a non-universal basic income scheme — you have to be poor to be eligible:
“Participants would be chosen by lottery and the criteria for eligibility were simple: applicants had to be over the age of 18, live in the city of Los Angeles, have one or more dependents, and be living in poverty according to the federal poverty guidelines.”
So just another scheme to tweak the Poor Law system.
“ the unstated premise here is that labour power always exchanges at its value (the so-called Law of Value).
Yes it is. Or, to be more precise, tends to do so in the long run with fluctuations below and above cancelling each other.
In challenging this you are challenging a key concept in Marxian economics — that labour power is a commodity whose price reflects its value. You seem to have argued yourself into the corner of saying that the value of labour power is only what is “necessary” to keep a human alive. But it is much more than that. It is the cost of what is necessary to reproduce and maintain the ability to do a particular job. This cost is the money cost of living. Which is much higher than bare subsistence, the poverty line or the minimum wage. The vast majority of workers get more than these because the value of their particular kind of labour power they are hired to exercise is (due to ability, training and/or the kind of work they do) higher than this.
If you really are saying that most workers are able to get themselves paid more than the value of what they are selling then you need to explain how they are in so powerful position compared with other commodity sellers who are unable to do this.
In fact the link between wages and the cost of living is so empirically obvious that even non-Marxian economists recognise it. Here, for instance, is Investopedia:
“The cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period. The cost of living is often used to compare how expensive it is to live in one city versus another. The cost of living is tied to wages. If expenses are higher in a city, such as New York, for example, salary levels must be higher so that people can afford to live in that city.”
Or have you some other explanation as to why wages in New York are higher?
The Marxian theory of taxation is really a corollary of the Marxian theory of wages as the price, reflecting the value, of labour power. As is the theory that anything provided free or at a subsidised price won’t lead to a permanent increase in the standard of living of workers as it will eventually lead to lower money wages.
I suppose people find this counter-intuitive because an increase in tax, direct or indirect, does leave them worse off in the immediate just as a free service or a state handout (like UBI would be) or less expensive imported food makes them better off for a while.
But is it all that difficult to explain or understand that, due to the operation of market forces, these will only be temporary? In any event, those on both sides — employers and unions — who negotiate wage rates understand this perfectly, the one side pointing to price increases the other to measures that mitigate this, in the course of reaching a deal.
And would be filled up with twice the number a few weeks later such is the desperation of many people to try to get a better life.
My guess would be that the most likely “solution” would some processing (and maybe detention) centre in France with all the Iraqi Kurds and others who don’t qualify as “refugees” being rounded up and shipped back.
But if we are in the game of thinking up ideal solutions within capitalism, how about ending sanctions on Syria and Iran or the support given for Saudi bombing in Yemen?
Unfortunately capitalism is capitalism. Geopolitics, wars and other conflicts of economic interest, together with mass poverty and misery are built-in to it.
All we can do is describe and record this.
The problem with your suggestion about what the capitalist state could do to deal with the problem (lay on air flights, instal in hotels, etc) is that many of the migrants cannot be classified as “refugees” under international law. A lot of them are self-confessedly economic migrants. It seems that most of those who drowned in that disaster were Kurds from Iraq. The Kurdish autonomous region there is probably the safest place to be in Iraq so I can’t see how anyone from there could meet the criteria for being a refugee under international law.
This is not to criticise them or say that they should be left to their fate as many are probably trying to join family members who were political refugees from when Saddam Hussein was oppressing the Kurds and who are already established in Britain or are even now British citizens.
In any event, I can’t see the point of speculating what capitalist states could do if they wanted.
Our case is not that taxes are not levied on things that workers buy or on wages but, wages being tied to the cost of living, anything that increases or decreases the money cost of living, including an increase or decrease in taxes, will affect the money wages paid. It won’t necessarily affect what workers consume, their standard of living, which will remain the same as what they need to consume to recreate and maintain their (particular type) of labour power.
This works both ways. The standard of living will not be permanently increased if taxes on what workers consume or taxes on their money wage are reduced or removed, as money wages will eventually adjust to the decreased money cost of living. The standard of living (what workers consume) will remain the same. So anything that decreases the money cost of living is ultimately self-defeating. It won’t increase the standard of living.
Similarly, the standard of living won’t be permanently reduced if taxes on what workers buy or on their pay are increased. In so far as this increases the money cost of living it will eventually lead to an increase in money wages, leaving workers with the same standard of living as before.
So, who benefits from a reduction in taxes or suffers from an increase since, in either case, the workers standard of living remains the same? On which class in society are taxes a burden? On who do they fall in the end?
Actually, in the period we are talking about (pre-WW1) this theory was employed more to show that a reduction in taxes on what workers consumed would not benefit them rather than to show what would happen if taxes were increased. The question of direct taxes on wages did not arise as it was generally accepted (by capitalists too) that workers simply weren’t paid enough to allow this ie that they couldn’t pay this as they didn’t have enough money to.
You introduce a new element by arguing that today workers are paid more than enough to buy what they need to consume in order to recreate and maintain their particular type of labour power:
“But what if the “necessary” cost of reproducing labour power is well below the average wage, as it is in most countries of advanced capitalism today?”
In other words, you are challenging the basic assumption that money wages are tied to the money cost of living as a worker, and are claiming that they are in fact higher than this.
But are wages really higher than the cost of creating and maintaining a modern worker’s labour power?
The floor is yours to try to make that case.
Keynes, writing in the 1930s (when the general price level went down as well as up) noted an advantage for employers of a slow depreciation of the currency. As a textbook puts it:
“Keynes expressed, in numerous passages in The General Theory, the view that wages were “sticky” in terms of money. He noted, for example, that workers and unions tended to fight tooth-and-nail against any attempts by employers to reduce money wages (the actual sum of money workers receive, as opposed to the real purchasing power of these wages, taking account of changes in the cost of living), even by a little bit, in a way they did not fight for increases in wages every time there was a small rise in the cost of living eroding their “real wages”.
A slow depreciation of the currency (of around 2% a year) is in fact now the coordinated policy of the G7 countries. So the so-called “wages-prices spiral” is started by governments depreciating their currency; and of course it’s not a “spiral” as it’s all prices including wages (the price of labour power) going up more or less together.
Whether this trick still works is a moot point as workers, like Alan and BD’s one-time work mates, learn what is happening and act accordingly through their trade unions.
This article, reprinted in the January 1909 issue of the Socialist Standard from an American publication of the time, shows that our position on taxes and the working class was held by others besides us.
The last-but-one paragraph sets out clearly the case against some popular reforms under capitalism. Today we could add UBI as a universal payment.
Interest rates are not included in the consumer price index. They tend to be higher when there is high inflation (depreciation of the currency), otherwise those lending money would not be getting back the same purchasing power as they lent. They go up with currency inflation.
There is an article on rising prices in the December Socialist Standard, being sent out today.
The House of Lords (critical) report on Quantitative Easing mentioned by Mervyn King was discussed in the September issue here.
King is right. While central banks can control rising prices due to depreciation of the currency (as they control that and in fact cause it), they cannot control rising prices due to other factors such as prices rising through shortages of materials. Which seems to be the main cause of rising prices at the moment (also misleadingly called “inflation” when it’s caused by demand exceeding supply without affecting the purchasing power of the currency).
The outcome of Pieter Lawrence’s campaign was this compromise resolution carried by Conference in 1991:
“That this Conference recognises that rules and regulations, and democratic procedures for making and changing them and for deciding if they have been infringed, will exist in socialist society. Whereas a ruling class depends on the maintenance of laws to ensure control of class society, a classless society obtains social cohesion through its socialisation process without resorting to a coercive machinery. However, in view of the fact that in socialist theory the word “law” means a social rule made and enforced by the state, and in view of the fact that the coercive machinery that is the state will be abolished in socialist society, this Conference decides that it is inappropriate to talk about laws, law courts, a police force and prisons existing in a socialist society.”
A comrade had a similar experience in 1908.
I meant it was rubbish from the point of view of clarifying what the term “ecofascism” might mean.
The word “fascism” of course originated in Italy as Mussolini’s name for what he was up to. It was the Stalinists who extended it to mean any authoritarian regime (that was inimical to the interests of state-capitalist Russia) including, in fact especially, Nazi Germany. But as far as I know the Nazis did not call themselves or regard themselves as Fascists. It is as the Stalinist meaning that it has become part of the political vocabulary and why we should avoid using it ourselves except in a historical context.
Since there were clear parallels between the totalitarian regimes in Nazi Germany and Stalinist Russia it is not surprising that some opponents of the Stalinists called it “Red Fascism”. We have even used it ourselves on occasion, even if more as a debating point than strictly an accurate description.
It is in fact a moot point as to which is worse. A totalitarian regime that openly proclaims that that is what it is or a totalitarian regime that pretends to be democratic? Both Nazi Germany and Stalinist Russia claimed to be socialist.
You’re right, Marcos, that one’s a load of rubbish. Now I am more than ever convinced that we should not use the term “ecofascism”. We should attack ecologists who say the world is overpopulated and that the population should be compulsorily reduced, but on the ground that the premise is wrong and so their conclusion does not follow. not on the ground that it is “fascist” (which is merely a way of saying that you very strongly disagree with it).
