ALB
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It was the last comment (I think) from someone called Joy. Here’s what she originally sent. All that got through was a comment that the re-think wasn’t radical enough without being able to go on to say what a radical rethink would be.
“There’s never been a better time to ‘rethink’, but the rethinking has got to be truly radical. It has taken a blip in capitalism for millions of people worldwide to be thrown on the scrapheap and be plunged into despair, for people who never thought it would be possible to have to resort to foodbanks in this country and to face starvation elsewhere. That’s how precarious capitalism is for nearly all of us with its imperative to sell, sell, sell, to consume, consume, consume. Once something happens to prevent that, all hell breaks loose. But, if we don’t do something significant now, the regime we live under will just carry on and all the well meaning attempts to make things better – for example the green movement, the feminist movement, the BLM movement – will just be co-opted by the system, absorbed into it and there won’t be that fundamental change that’s necessary. By fundamental change I mean looking beyond producing things for profit and instead producing for need via a collective, voluntary effort by humanity as a whole. In that sense the Covid crisis has pointed the way. It’s shown that we can get together collectively and help one another in a constructive organized way. The lesson we need to take from this is that we can and have to organise society in just this way. It’s the need we all have to make money to survive that has caused Covid-19 and that, even without any virus crisis, causes wars and poverty. If we don’t move to a rational, resource-based organisation of society where we are all economically equal, we can ‘rethink’ till we’re blue in the face, but it will be the same old same old.”
I don’t think our critic has read the article but has just assumed what it was going to say. The title of the article itself — ‘Working class lives matter — makes it clear that we don’t support ‘IDPOL nonsense’. It is an aspect of the poverty problem. Misidentity politics is a dangerous divisive distraction.
Incidentally, perhaps unexpectedly, David Aaronovitch’s column in the Times of 25 June was headed ‘Poor lives matter whatever their colour’.
https://www.thetimes.co.uk/article/poor-lives-matter-whatever-their-colour-g2p7vv572
Exactly! The whole financial superstructure which capitalism requires is an enormous waste of resources and there’ll be no banks or money in socialism.
But now we have started discussing that passage from Marx, there is something curious about it. Marx mentions one-pound notes but there hadn’t been any issued in England since the middle of the 1820s, a situation regularised by the Bank Act of 1833 which laid down that only Bank of England notes of at least £5 were legal tender. After that the only banks that could issue one pound notes were in Scotland and Ireland and weren’t issued in England again till 1914. I suppose Marx chose to write of one pound notes for ease of explanation (after all, it wouldn’t have mattered whether they were £1 or £5 notes as long as they were notes) or maybe he was referring to what used to happen in the 1820s.
Good idea to have transferred this from that toxic animalist thread (which I am sure I won’t be the only one not to look at). The link should have been called “The difference between Private Capitalism and State Capitalism”. We are more interested of course in what they have in common— minority ownership of productive resources; production for sale with a view to profit; and the wages system— and is why are opposed to both.
You say that you think Marx meant that “the bankers were using notes to gain more control over the financial sector.”
This doesn’t stand up for a number of reasons.
First, the context of the passage itself. Here it is in full:
“Since the quantity of money capable of being absorbed by the circulation is given for a given mean velocity of currency, all that is necessary in order to abstract a given number of sovereigns from the circulation is to throw the same number of one-pound notes into it, a trick well known to all bankers.”
As can be seen from the opening part (omitted from most quotes) Marx starts from the premises (which he had demonstrated in the previous part of the section) that the economy only needs a given amount of money to buy and sell goods and services. Where the currency is composed of gold coins and paper money convertible on demand into a fixed amount of gold, if banks increase paper money then the amount of money needed will not alter. Marx mentions one possible result — that a certain amount of gold coins would drop out of circulation. Another would be the excess notes come back to the bank. Either way the amount of money in circulation remains the same.
Whatever happens, it is difficult to see how the bankers gain more control over the financial sector or that Marx could be saying this. His basic argument is precisely that they can’t control the amount of currency in circulation.
The school of economic thought that he was arguing against (the Currency School), on the other hand, did argue that the banks could influence this and that what issuing more bank would lead to would be a rising price level ( inflation); which was considered something to be avoided and that this could be done by limiting the power of banks to issue notes.
You said you have read up about banking in the middle of the 19th century so you will know that the Currency School won over the government and their theory was behind the Bank Charter Act of 1844 which sought to limit the amount of notes that could be issued (by giving the Bank of England a monopoly on their issue and saying they could only issue a limited amount of paper money not backed by gold).
This certainly gave the Bank of England more control over the currency but Marx pointed our that it wouldn’t work. He was proved right and every time there was a financial crisis the government had to suspend the operation of the Act and issue more paper notes without gold backing than was normally permitted.
Marx criticism of the banking legislation of the time was that it was not some trick to defraud the public, but that it was stupid even from a capitalist point of view.
Not necessarily. The gold (coins) that drop out of circulation don’t become the property of the bankers. If they are deposited in a bank they remain the property of the person who deposited them.
There were also limits to how far a bank could go in issuing bank notes. These were in effect liabilities (in the accounting sense) for the bank with a holder of one of them entitled to exchange it for a gold coin. If a bank issued too many notes it risked finding itself unable to honour them if too many exercised their right to convert them into a gold coin.
In any event, even at the time Marx was writing, commercial banks could no longer do this. The Bank Act of 1844 established a monopoly in the issue of paper money for the Bank of England (some banks were allowed to continue issue notes — a few in Scotland and Northern Ireland still can — but only if they were backed by an equivalent amount of Bank of England notes).
This Act also places a limit on the total face value of paper notes without them being backed by gold that the Bank if England could issue. This was known as the “fiduciary issue”; any notes issued above this limit had to be backed by an equivalent among of gold in the Bank’s vault.
What I hadn’t realised before you mentioned this quote (it’s in chapter 2, section 2b) was the extent to which it is cited on the internet to try to show that Marx thought banks and bankers were tricksters. When Marx used the (German) word for “trick” it wasn’t in the sense of fraud but in the sense of a feat or performance as by a magician or in cricket a bowler doing the hat trick (for those who don’t understand cricket, that’s bowling three batsmen out in three successive balls, which is hardly fraudulent). In the French version, which Marx saw to the press, the word is “truc” which has no connotation of fraud or even self-interest.
If this quote is taken to mean that Marx thought that bankers were tricksters that’s a misinterpretation.
In that section of Capital he is discussing what determines the amount of currency in circulation when the currency is (as it was in his day in Britain but which of course has long since ceased to be the case) gold coins and paper money convertible on demand into a fixed amount of gold. What he is saying here is that one way to take gold coins out of circulation is to increase the number of convertible notes. This only works because the total amount of currency in circulation is determined by the needs of the economy (number of transactions to be done).
Marx was arguing against a school of economic thought (known as the Currency School) that supported the Quantity Theory of Money according to which the level of prices was determined by the amount of currency issued. If this theory was correct then the “bankers’ trick” would not work. What should happen instead is that the general price level would go up, with the amount of gold coins in circulation staying the same. Marx’s point in this passage is that the fact that issuing more convertible paper notes does not lead to this but to less gold coins circulating shows that the Currency School’s theory was wrong.
There is more on this (and so on the background to this passage) in this article from the December 1983 Socialist Standard:
http://socialiststandardmyspace.blogspot.com/2019_12_02_archive.html?m=1
Some more stuff on Roosevelt’s New Deal.
“I want to save our system, the capitalistic system.” (Roosevelt 8 May 1935)
“He (President Roosevelt) is fighting to save the capitalist system, and not to destroy it”.— Sir Arthur Willert, Press Officer and Head of the News Department of the Foreign Office, in an article on American politics. (Times, 29 April 1936.)
Of course by “capitalist system” Roosevelt meant private capitalism as production for profit by private enterprises. That survived but how did the workers fare?
“When Roosevelt ran for reëlection in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930. (…) When Roosevelt ran for the unprecedented third term [in 1940], unemployment was 14.6 per cent.“
(https://www.newyorker.com/magazine/2013/03/04/how-the-deal-went-down/amp )By coincidence (I think) Darren has just put this article on his blog showing that the class division cuts across all groups.
Rather cruelly yesterday’s Guardian recalls Boris’s hero Churchill’s description of Roosevelt’s New Deal as “this war on wealth and business, this ruthless war on private enterprise”.
Article from the Socialist Standard here:
“The American South, despite its slave labour, was basically a commodity society in which goods (including slaves) and services were produced for sale on the market with a view to profit. A more fitting designation for the system is <i>Plantation Capitalism</i>.”
Even Peake has admitted that she was wrong, tweeting “I feel it’s important for me to clarify that, when talking to The Independent, I was inaccurate in my assumption of American Police training & its sources.” She didn’t explain why she immediately jumped to the conclusion that the Israeli secret service must have been involved.
According to Cook, she also thinks that we are being ruled by “capitalist, fascist dictators”, another indication of how prone she is to conspiracy theories. On the other hand, she might just be a joke. Citizeness Smith.
Yes, Keynes was merely providing a theory to justify policies already pursued by left-leaning reformists… and others. Not that Johnson is planning to do anything as radical as either Roosevelt or Hitler, essentially not much more than implementing more rapidly spending plans that had already been drawn up.
“You are the idealists and the elitists, very much like Lenin in fact, if you think only of making the rest of humanity into copies of yourselves. In fact, you are wanting others to follow you, in fact if not in theory.”
I am not clear Mutual whether this is you quoting our feathered friend or your own view. It would be rather strange if the latter coming from someone who has put the Party case in the Socialist Standard and other publications for years. But I suppose the “if” would let you off the hook since we don’t actually think only of making the rest of humanity into copies of ourselves.
Our role is merely to help the class struggle that is going on anyway become a conscious struggle to end the capitalist system of class ownership and production for profit and replace it with common ownership and production directly for use, in line with the development of the methods of production that have taken place.
