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Dear Comrade,
I have just been reading my first ever copy of your monthly magazine for May 2012
and came across the above column. I was so horrified at the lack of accuracy that the
article contained, that I feel compelled to rectify the numerous errors of factual
analysis!!!! To be frank, the author cannot have any real understanding of the basic
principles of banking!!! And as a professional accountant who has worked in finance
for many years, the errors cannot go unchallenged!The author states that Banks ‘CANNOT CREATE CREDIT FROM NOTHING’. What utter
nonsense!! We would be unable to operate a capitalist system at all were that the
case!!! In the days before the ECB and various so-called technical adjustments, banks
issued credit/loans using a regulatory tool called the Liquidity ratio (now more
strictly defined and called the Reserve Asset Ratio and part of the so-called Basel
Accords of recent years). This ratio determines by how much the banks are allowed
safely to increase their Loans as a multiple of their bank deposits, and there are
several measures of this which used to go under the names M1, M2, M3, M4 as measures of
the money-supply by the regulators. It currently stands as broadly 8.5% throughout
the banking system. This is the method by which banks issue Credit out of nothing
and it is what they do day in day out, in theory managing the risk of over-lending
in this way!!! I fear the author is getting very muddled as to what constitutes money!!!!
Notes and coins are today completely insignificant as they are a miniscule %.Were the banks unable to issues credit vastly in excess of bank deposits, the
capitalist system could not function due to the time it takes to administer all the
rules etc and the fact that the demand for credit vastly exceeds what is genuinely
required for the real productive economy, owing to the vast speculative activities
in currencies, property,commodities, oil etc etc that creates market distortions but
which no govt. seems willing to regulate!! Hence the credit crunch!!! In order to
keep the gravy train rolling and not to breach the basic liquidity ratio rules,
banks started to fund their lending to the non-productive economy by taking on
short-term debt from various sources, and lending it longer-term to their pals in
the City Hedge Funds, currency gamblers, all sorts of dodgy finance, and shifting
it off-Balance Sheet, but the minute that it all went pear-shape, they were left
totally exposed to short-term liabilities that were not covered by any liquid assets!
And they had to run to the Govt to bail them out of the mess they had created.This, of course, is the exact opposite of what the theory of free-market capitalism
says should happen!!! It says that if a business fails, it goes bust!!! But that
apparently now only applies to the workers!!! If we lose our jobs and run out of
money, we go bust!!! They dont!There is a very simple way of seeing that credit is almost entirely created out of
nothing – if you add up the banks’ balance sheets Total loans outstanding at any
time, you will see that it is many times the value of the entire UK economy!!!! Were
loans only created out of ‘Real’ assets, then this could not happen!!!I fear your
colleague needs to study finance rather than economics!!! Economics as presently
taught is 99% bullshit. Not since the end of the Gold Standard has credit been
remotely tied to what a bank holds as deposits. This is why some monetarist purists
are now calling for a new Gold Standard so that all money has to have an equivalance
to the value of the gold in existence- pure fiction of course!!!Since the USA hold
90% of the banking gold reserves, WW3 would be just round the corner!!!! Just
imagine if the USA had control of the entire world money system!!! They would have us
all bowing and scraping to their demands!!! The mind boggles to be frank! Not for nothing
did the Yanks accumulate most of the gold reserves! Its the only thing that prevents
USA from being declared insolvent by the IMF!!! But it wont be long coming. They have lost sight of the most basic laws of economics!Incidentally, the collapse of the banking system in 2008 was due solely to the
massive explosion of the use of Derivatives by the financial gamblers in the City,
Wall St etc, who saw a way of inventing profit purely by creating artificial
contracts by the sale of so-called CDOs, MBS’s etc, with an ‘implicit’ rate of
interest, but all it was is book-keeping entries in a bank ledger, thus creating
fictitious profits, a process of gigantic speculation that could not be sustained
once the underlying assets (housing) began to lose value due to inflated property
markets running out of steam!!! In fact the real productive economy was not at risk
until the casino collapsed around it. But to his shame, Gordon Brown knew nothing,
saw nothing and DID nothing to stop it!!! A more hubristic case of vainglorious
lunacy driven by arrogance, we are I trust unlikely to see again for a long time (???).I am seriously thinking of joining the SPGB, given that capitalism is going to
collapse fairly soon and we shall need to prepare for its replacement. When is the
next meeting at Clapham?? I’d like to come along.Regards, Adrian.
Letter received on this:Dear Editors,After reading the review of the film ‘The Way Back’ in the Socialist Standard of April 2012, I realised that the plot of the film was very similar to a book I read in 1981. Then I was 15 years old and a member of the Scouts (yes, that hangover from the days of the British Empire) and the book ‘As Far As My Feet Will Carry Me’ (1957) by JM Bauer was recommended to me by the Troop leader. The book was originally published in German and recounts the true story of a German Paratroop officer captured behind enemy lines in the USSR in 1942 and his subsequent sentencing to 25 years labour in a gulag lead mine beyond the Arctic Circle in Siberia and from where he escaped and spent three years travelling through the far eastern parts of the USSR to freedom in the West.The first half of the book relates the experiences in the gulag but it is the second half of the book which recounts the travelling across the siberian tundra that is of interest. The narrator meets aboriginal peoples of the siberian tundra who are known as the ‘Chukchi’ or the ‘Reindeer Chukchi’ who live a variation of a hunter-gatherer existence as pastoral-nomadic tribespeoples where their entire existence is centred on the reindeer – for transport, food, clothing and housing, and they operate a religious belief system based on nature deities and shamanism. Chukchi families were banded into larger groups of people with a figurehead chief and practised a primitive communism. The ‘reindeer men’ are a remarkable example of peoples living an existence from 35,00 years ago which is described in Lewis Morgan’s book ‘Ancient Society’ (1877) and it is Marx’s notes to this book that formed the basis for Engels’ work ‘The Origin of the Family, Private Property, and the State’ (1884).The USSR under Stalin even “collectivised” the Chukchi peoples in the 1930’s but it was only partially successful as the ‘reindeer men’ used the “kolchoz” (collective farm) as a type of base which became part of their pastoral-nomadic existence. The book also recounts the narrator’s time at the collective farm.I have discovered that in recent years the veracity of the account of the escape from the gulag and the years with the Chukchi peoples is in serious doubt. The book is still a very interesting account of aboriginal existence and the soviet collective farms in Siberia.Steve ClaytonSouth London Branch
Email reply received from Anthony Hilton:
Quote:Your comments on my cash mountains article have been forwarded to me. I don’t think your conclusion is right. Certainly it is what conventional economic wisdom dictates viz companies will not invest when they cannot see a profit. However company profits are the highest they have been for 50 years as a percentage of GDP, and interest rates and hurdle rates are the lowest for 200 years, so in spite of the bad news out there it beggars belief that companies can’t see a profit opportunity. My piece was looking for an additional explanation as the conventional wisdom of your conclusion does not provide it. Thanks for your interest and thought provoking letter. Regards Anthony HiltonEmail received from the person who wrote the letter in the March Socialist Standard:
In Laurens Otter’s text he states:“The IWW removed the political action clause because it believed that De Leon was forcing all members to join his particular party. Incidentally the resistance came from people who were in the Left of the SPA. the anarchists – like Vincent St John – played no part in the split.”
I don’t know where Laurens Otter picked up this commentary but in the minutes
to the IWW Convention of 1905 and 1906 both of which I have copies of and in
De Leon’s collected series of letters on the issue of political and economic
actions of the working class at the time entitled As To Politics he
insistently maintained the requirement that the economic organization of the
working class must be unaffiliated with any political party; that it will
reflect its own political party. Hence, he stated in the first letter in
the pamphlet to John Sandgren, last paragraph: “As to the Socialist Labor
Party, it will never need to be appealed to ‘to break up camp’ after the
bucket of the I.W.W., having gathered sufficient solidity, will itself have
reflected its own political party. That day the S.L.P. will ‘break up camp’
with a shout of joy – if a body merging into its own ideal can be said to
‘break up camp'”. Mr. Otter will find this theme and similar replies repeated
again and again throughout that writing.For Socialism,
Bernard BortnickA comrade who actually lives in Todmorden but who is not subscribed to this forum has asked for this contribution to be posted here:With reference to Eat for Free and the Todmorden Incredible Edible, we have one of the free access food tubs in Todmorden so I thought I might make a few comments.The Incredible Edible people are fairly on the ball, much more so than Brian in the “Socialism at Your Fingertips” posting. No one here claims (or should claim) anything more than that the project can further local sustainability in food production. Certainly there have been no “amazing results” (excepting propaganda coups such as the recent visit of Bonnie Prince Bigears) and it definitely does not involve the whole community. Mostly it’s ‘middle class’ in-comers and vegetarian types, who are responsible for the project. While some of the better off locals are involved at a lower level, the substantial Asian origin minority and the white estate dwellers are largely indifferent, as indeed one might expect. Doubtless they have more important worries, such as working out how to keep head above water. So far as “community well-being” is concerned the results are nil. Todmorden demonstrates the whole gamut of modern anti-social behaviour engendered by late period capitalism, from lippy kids to pedo-pervs and nazis, and probably more than most places due to its cotton based economy being smashed long ago.Let’s be very clear: There are absolutely no implications for socialism, no “lessons” to be learnt. Providing a bit (and it is a very minor bit – try to live on it and you’ll be Musselmanned in no time) of fruit and veg free cannot lead to a free society, even incrementally with other, more half-arsed, schemes such as the LETS. It’s not the “either/or thing” of Robbo but a “something else entirely thing”. It’s irrelevant (I should know – I do it!). After all, what have these glorified allotments to do with the means of production? Sweet fuck all. They’re not even peripheral. Neither is it some sort of ‘socialism in miniature’, a guide to human behaviour under “free access”. Such an attitude is the purest utopianism.
Comment received from a Socialist Standard reader:Dear Comrade,Please forgive an elderly anarchist, intervening1 in what you no doubt consider a private fight.Pace the SS editors, the story you relate was fairly well known before 1952; Guy Aldred certainly recounted it in a pamphlet. I am fairly certain that I had read it in something produced by the SPGB. & it was certainly in one of the more widely circulated Labour histories, (whether by GDH Cole or not I cannot now remember.) I came across it in the Socialist Leader (the then paper of the ILP) & I would think Bevan had mentioned it in Tribune, as also Gallacher in his auto-biography.Obviously you are right that the trade unions lacked a socialist consciousness, (after all even the Labour Left & the Stalinists argued from that.) But your letter (& the SS editors) go on to make two assumptions, neither correct:(a). the IWW didn’t stress the need for social change,& (b). the SPGB at that time did not believe in working in industrial unions.The IWW removed the political action clause because it believed that De Leon was forcing all members to join his particular party. Incidentally the resistance came from people who were in the Left of the SPA. the anarchists – like Vincent St John – played no part in the split.SPGB members were active in the SLPGB-formed Advocates of Industrial Unionism, for a time forming the majority of its membership; in the USA, WSPUSA members were active in the IWW as late as the ’50s. They didn’t then regard this as cutting off their legs.We do indeed have differences: but it would help if we each only talked of real differences, rather than inventing imaginary ones.fraternallyLaurens Otter
Hello,
This email message is a notification to let you know that the Minutes for the 2011 ADM have been uploaded to the Files area of the spintcom group.
File : /ADM/ADM Minutes 2011.doc
Description : Minutes of the 2011 Autumn Delegate MeetingYou can access this file at the URL:
http://groups.yahoo.com/group/spintcom/files/ADM/ADM%20Minutes%202011.docWe have also received this email from another (better) former member (joined 1953):
Quote:I was in the Birmingham branch some 65 years ago. Howard Grew was chairman, I think, and his wife was secretary. We had a regular speaking stand in the Bull Ring, and met in a nearby pub. I was then a cub reporter on the Smethwick Telephone weekly newspaper and recall those meetings with great pleasure.Quote:I am very glad to be able to keep in touch with the party through Facebook. Just listened to the talk on Rosa Luxemburg. Wonderful!I forgot to include this item which is the last item under 7. Any other business -(f) It was noted that copies of the the new Questions and Answers about Socialism leaflet had arrived at Head Office on Friday 2nd December. Copies of the Identity leaflet are scheduled to arrive at Head Office on Monday 5th December.
From the December Socialist Party of Canada Newsletter on this forum here (under World Socialist Movement):
Quote:The November meeting took place at Occupy Toronto. The experience was really good. The camp was extremely well organized along socialist type lines – no leaders, elected committees to run everything, discussions and education all over the place, a speakers corner every night where anyone can get up and speak and voluntary labour. I urge anyone in a community with an Occupy movement to make contact and put forward our socialist ideas and show an alternative to the reformist ideas that some hold.Scroll down the December Newsletter for more on Occupy Toronto and its fate.
Copy of letter sent to the Belfast Telegraph on the strike and the comment of that unfunny clown Clarkson posted here.
The Socialist Party of CanadaSecretary’s Report for December 1, 2011Email Report- The Bullet – Organized Labour and the Occupy Movement.- The Bullet – Corporations Occupy Fair Trade.- WSPNZ – EC minutes for October received with thanks.- The Bullet – The Regressive Politics of the Iranian-Canadian Khavri Petition.- The Bullet – Italy and Greece; Rule by the Bankers.- The Bullet – You Can’t Evict a Revolution.- The Bullet – Crisis in Italy and Greece: Marx on Technical Government.- The Bullet – Resisting Expropriation of the Occupy Movement.- Left Streamed – Understanding and Fighting Austerity.- The Bullet – Unraveling Carbon Markets.- The Bullet – Resistance Takes Root in Barcelona.- Note that he Bullet and Left Streamed are not based on scientific Socialism but are available for information purposes only.Good of the Movement- The November meeting took place at Occupy Toronto. The experience was really good. The camp was extremely well organized along socialist type lines – no leaders, elected committees to run everything, discussions and education all over the place, a speakers corner every night where anyone can get up and speak and voluntary labour. I urge anyone in a community with an Occupy movement to make contact and put forward our socialist ideas and show an alternative to the reformist ideas that some hold.- Next meeting – coffee and discussion on Wednesday, December 14th, atThe Second Cup, north side of Bloor Street, 4 stores east of Spadina Avenue, Toronto, 6:30 – 8:30pm. Feel free to bring a friend.- One introductory package requested.- One member questionnaire successfully completed. We welcome Zachary Lohnes of Nova Scotia.- Tom Coles has set up a facebook group for political discussion. Go to Facebook, type in Clearwater Forum and make a friend request to join the group. Many thanks for your efforts, Tom.- There will be a General Administrative meeting in December. Please send in any comments, suggestions, proposals to spc@iname.com- We are preparing for the Spring edition of Imagine. If you have articles, pieces, suggestions, comments, please start sending them in to us. Thanks.Finances- Secretarial expenses for November, $26.88. Donation of $20 received with thanks.Karl’s Quotes- On surplus-value coming free to the capitalist, “The circulation mechanism, however, has shown if the capitalist class casts money into circulation to be spent as revenue, it withdraws this same money again from circulation, and so the same process can always begin anew; considered as a capitalist class, therefore, it remains now as before in possession of this sum of money needed for the realization of its surplus-value. If the capitalist not only withdraws surplus-value from the commodity market in the form of commodities for his consumption fund, but at the same time the money with which he buys these commodities flows back to him, he has evidently withdrawn the commodities from circulation without an equivalent. They cost him nothing, even though he pays for them with money. If I buy commodities for one pound sterling, and the seller of these commodities gives me back my one pound in exchange for a surplus product that costs me nothing, then I have obviously received the commodities for nothing. The constant repetition of this operation in no way alters the fact that I constantly withdraw commodities and constantly remain in possession of the one pound, even though I part with it temporarily in order to obtain these commodities. The capitalist constantly receives this money back as the realization of surplus-value that cost him nothing.” (Capital, Volume II, pp550/551, Penguin Classics edition).Food For Thought- Top international climate scientists, meeting in Africa had somesharp warnings for the world’s governments – “Get ready for unprecedented extreme weather.’ They point out that since the 1970s, 95% of fatalities from storms have been in developing countries. Making preparations, they say, will save lives and money. Perhaps the latter might have some effect on the worlds’ governments!- Meanwhile, scientists say that the Arctic sea ice has declined more in the last half century than it has in the last 1 450 years.- However, The New York Times points out that the environment is no where to be seen in the US and has disappeared from the political agenda, “ …now that nearly every other nation accepts climate change as a pressing problem, America has turned agnostic on the issue.”- The Arab Spring continues as the Egyptians once again take to the streets because they see that the old rulers, the army, will become the new rulers. The brutal crackdown by the military seems to confirm their worst fears.Meanwhile, Tunisians interviewed by The Toronto Star (Tunisia: The Jobless Revolution, 26/Nov/2011) are mainly saying that nothing has changed for them. Unemployment remains high, life remains a struggle, and they have put their trust in new untried and largely unknown leaders. The future looks very uncertain. Taking a page from the Occupy Movement (see below) would be a large step forward.- The Toronto Occupy Movement has now been evicted by court order and by the actions of the police and the city, but, as we like to say, you can’t evict a conversation or an idea. So I expect the movement to carry on in some yet to be determined form. Some of the more important aspects are tenets such as anyone affected by decisions should be at the table making them, no one gets left behind, and the organization of the camp, i.e. no leaders, everyone speaks and listens, democratic decisions, volunteer labour. Hopefully this will be carried on in the future. Also remarkable was the speed and cohesion of the movement in setting up camp and the rapid spread throughout the world. If this movement can shed its reformism and adopt the socialist case, it could be a major step forward. The press mainly continues its establishment stance – The Washington Post wrote, “For those of us who don’t live near one of the protest sites, Occupy Wall Street supplied some comic relief, but they were never meant to survive the onset of inclement weather. Good riddance.” However, David Olive of The Toronto Star points out that it was mainly the courts, the city, and the police that did the evicting. He also notes that 1.3 million Canadians and 26 million Americans are unemployed or have given up looking for a job. Also, since 1959, wages, as a percentage of the GDP have fallen from 51% to 44%, worth one trillion dollars that have been diverted into profit. The Star editorial also comments that the occupation is a 40 day wake-up call to put right the ills that afflict our system. Let’s hope the movement comes back to bite the establishment!- The Toronto Star has been running a series on the BRIC countries (those emerging countries that have attracted the avaricious eyes of the countries in the northern hemisphere and who have invested heavily to make big profits, i.e. Brazil, Russia, India, Brazil etc.). Economic indicators are shooting up and a little is trickling down to a few workers but mainly it’s business as usual for the average Joe. For example, the Star reports, one in two Indian children are malnourished, 74% under three years are anaemic, and 400 million Indians live in poverty – i.e. $1.25 a day! In South Africa, large investment in Mining has pushed up the GDP and unemployment has improved from 37% (2001) to 23% today. However, amid the new wealth, 67% of Africans, 41% of coloured, 14% of Asian/Indian, and just 4% of whites are considered below the poverty line. Life expectancy for the nation is 49.3 years. As always, wealth goes back to the investors and the rest share a few crumbs.- In Canada, we have failed to live up to the 1980s promise to eliminate poverty by 2000, just as the provincial governments much trumpeted 25% reduction in poverty in 5 years has failed. The recession was cited as an excuse, of course. Now, 10% of children live in poverty and they make up 40% of the nearly one million food bank clients, Canada’s main growth industry.- Canadian business likes to point out that, although not recession proof, we are better positioned to cope and our banks are better regulated .Last month, though, Canada lost 54 000 jobs, most in manufacturing and construction, the unionized and better paying jobs. Socialists know that no one can escape the world economy.- Meanwhile, mobile infrastructure company Nokia Siemens has announced that it will be cutting 17 000 jobs over the next few years. In a burst of loyalty to his employees, the CEO said, “As we look toward the prospect of an independent future, we need to take action now to improve our profitability and cash generation.”- The futility of reform – the auto industry agreed to a two-tier wage system with new hires paid as low as $14 per hour. Chrysler chairman, Sergio Marchionne disagrees with the two tier system and wants every worker on the same scale – the lower one!- Recession does not to hit some very hard though. The Globe and Mail Reported (Nov 2, 2011) that Prince Charles had to scrape by with just 133 staff to look after him and Camilla, more than 60 of them domestics such as chefs, cooks, footmen, housemaids, gardeners, chauffeurs, cleaners, and his three personal valets, who look after his wardrobe plus the important task of ironing the laces when Charles takes off his shoes.Just a Thought- Watching a European soccer game recently, I noticed the Italian team wore the sponsor, Arab Emirates, on their sweaters. The Spanish team did likewise with its sponsor, Bahrain Union. Do the capitalist enterprises put away their differences if money is offered? Just wondering.Reading Notes- Explaining how in emerging organized societies and later, the powerful came to their position, Philippe Gigantes, in his Book, “Power and Greed”, writes, “For centuries, the Brahmins in alliance with the next caste, the warriors, grand acquisitors all, lorded it over the rest of the population. This is the oldest political alliance of all time: very early in human history, the autocrat with the big club and the witchdoctor with his potions and maledictions, became natural allies. The one with the big club organized the hunt and the defence of territory. The sorcerers took care of the uncontrollable, the unpredictable, and the inexplicable – he took care of god in other words. The two, king and priest, in modern parlance, ran the tribe through the fear of violence and the fear of ‘God’. In that tribal system, they each took a much bigger share of everything.”Sound familiar?For socialism, John
