1920s >> 1924 >> no-233-january-1924

Where The Labour Party Fails

Many are the points on which the Socialist disagrees with the policy of the Labour Party. We have frequent occasion to condemn the actions of its members, and the utterances of its leaders, on the ground that they are opposed to the interests of the workers; but there is one ground of disagreement which is more important than all the others and which, in fact, underlies most of them. Before discussing it let us exclude the minor ones for the purpose of clarifying the issue. Let us assume that the leaders of the Labour Party are men of honesty and integrity, that they possess as much wisdom as it is given to any man to possess, that they sincerely desire to do for the workers all that is humanly possible, and that they are gifted with uncommon singleness of purpose.

Let us also be clear on certain general assumptions, acceptable to them as well as to us. They are that only by the consent of a majority of the workers can any considerable change be made; and that any such change can at least be attempted within the framework of the existing constitution of this country. The workers by capturing Parliament will be able to rebuild society, secured, by their control of the armed forces, against interference from any quarter.

Even on these assumptions it would still
 be impossible for us to support the Labour Party, and the reason is that we believe the capitalist system to be the enemy while the Labour Party does not.

One section believes that low wages are the evil, and that the remedy lies in raising them. Another believes that inflation will bring prosperity by stimulating trade, and a third looks to deflation and low prices as their Mecca. Some members want to increase the technical efficiency of production, decrease the costs of producing British goods, and thus capture a larger share of the world’s trade; others want to eliminate the middleman to achieve the same object. Just now many hopes are placed on a capital levy to reduce the national debt, and with it, taxation. Some Labour propagandists urge that the state take over the land and the staple industries and run them like the Post Office. Relief schemes for the unemployed; conciliation to obviate strikes; honest government and open diplomacy; bigger old-age pensions and more compensation for injured workmen: state assistance in the building of workers’ houses, statutory minimum rates of wages; bounties on the production of corn; heavy death duties and excess profits taxes, and even the limitation of inheritance; these are some of the many suggestions made.

Now it is obvious that these proposals are put forward to meet certain definite evils, and that if they could be isolated and treated by themselves many of them would he of decided benefit to the workers. Other things remaining unchanged it would be good for the workers to have their wages raised; greater efficiency regarded on its merits alone would be most desirable; and nobody would pretend that stoppages of production are in themselves praiseworthy objects of human endeavour. But unfortunately none of these things can be treated on its own merits. We live in a system of society called capitalism, and every proposal, made by whatever party, must be regarded in the light of its effect on the working-class as they exist under capitalism. So regarded, some of these reforms are plainly bad for the workers and good only for the capitalists; such is greater efficiency. Some are of no effect at all. Some are of limited use, but bring inevitable aggravations of other evils; such is a legal minimum wage which leads to the putting off of those who are not able-bodied and induces the employers to instal machinery to replace hand labour. And all of them are harmful to the degree that they are used to keep your minds off the real problems which face you.

Our attitude is simple and straightforward. We see many great and growing evils from which we, as workers, suffer, and after due examination we see that it is the capitalist organisation of society which is the cause of these evils. We see that poverty, unemployment, war and many other harmful features of the modern world can be abolished only by the establishment of Socialism, which is a new and different social system. In this we differ from the Labour Party.

We see that CAPITALISM is the cause of unemployment; not the wickedness of the capitalists, nor the selfishness and incompetence of their governments; not war nor low wages; not their foreign policy nor their inactivity at home. We see that the workers are wretchedly housed and badly fed and shoddily clothed and vilely miseducated, because they are poor. We see that they are poor because they are robbed, and they are robbed because the capitalist system is based on robbery. The Labour Party says “let us administer the system, and we will show you that we are fit to govern,” but if we are correct, when we say that it is the system itself which is at fault it will not matter who administers it. It will still be a system of exploitation of one class by another. If it ceases to be this, it will cease to be at all, because that is its nature. A system which is based on the robbery of the workers obviously cannot be made to work out to their benefit.

In the December issue some information was given showing how utterly the Australian Labour governments had failed in their attempts to make capitalism a success from a workers’ point of view. Those workers are still exploited and they are still poor: they still suffer from unemployment, and they still cannot get houses. Their position is, in fact, worse than when Labour governments took office, and this is not due to their having been governed by a Labour government but to the continued existence of the capitalist system.

What then do we mean by this term capitalism? I will take the definitions of two anti-socialists, both of them recognised authorities on Economic History.

Sir William Ashley writes :—

By capital the business world has always meant . . . wealth which its owner can employ for the purpose of gain; and by investment we mean . . .  the fact that there really exist openings for the use of wealth in directions which will bring an income or “revenue” over and above the return of the sum employed. (The Economic Organisation of England, page 79.


Archdeacon W. Cunningham, D.D., F.B.A., defines it as :—

   The fund of wealth which is employed with a view to obtaining an income. (The Progress of Capitalism in England, page 20.)

A capitalist then is one who owns capital, and through his ownership receives an income; and the capitalist system is one in which this form of ownership predominates.

Capitalism, therefore, is a system in which the means of producing wealth are privately owned. There have been other systems of private ownership, such as Feudalism and Slavery, but in them the wealth has not taken the form of capital. Before them again there were societies in which there was no private ownership of the means of producing wealth and no exploitation of one class by another. Socialism will mean not only the end of capitalism, but also the end of all private ownership of the means of production and exploitation. Of course, when we talk about common ownership we are only referring to the means of production, like the land and the factories, not houses and clothes and food and things like these.

Capitalist enterprise was a feature of the ancient civilisations round the Mediterranean, but in Western Europe its rise has been quite a recent development.

There are, of course, forms of social organisation which are appropriate to conditions in which capital does not exist at all; the formation of capital implies the existence . of money economy. In countries and in circumstances where natural economy prevails, capital is unknown. . . . (Cunningham, page 21.)

Other factors needed for the development of capitalism were the existence of free landless labourers; and the prevalence of buying and selling instead of the production of goods to be consumed by the producer. These clearly had to be preceded by the common use of money.

Cunningham notes the coming in of money in the 14th and 15th centuries and the corresponding break up of “natural economy,” which is the name given to societies in which there are no money transactions.

The change from natural economy which existed at the time of the Conquest, to the capitalist system which had come into complete possession at the beginning of the 19th century, is spread over a period of eight centuries (page 21.)

Now nobody would deny that capitalism brought with it great economic, political and social advantages, but we say that it also brought the seeds of unavoidable evils and conflicts, and that the evils are now so great that only a new and higher system can be of any use. Such a system is Socialism.

Now, remembering our definition, let us examine the system which covers the whole civilised world. We find that some countries are monarchies and some republics; some have free trade and others protection; some have Liberal or Conservative governments and others have Labour or Communist governments; some have much and some only little foreign trade; some have big national debts and heavy taxation and others little of either; yet in one thing they are all alike. In all of them the capitalist economic system prevails. In all of them there is a class of poor people who have no property, and who live by working, and another class of rich property-owners, who live by owning property. The workers get wages or salaries, which they have earned by their labour. It is they who have grown the food, made the clothes and built the houses and factories, and carried goods from one place to another, and it is they who have organised this work and supervised and directed it. On the other hand, the property-owners have received rent, interest and profit without having to labour for it at all. From what source then do their incomes arise? Is it not plain that these people who own the means of production are living on the labour of those who use them to produce wealth?

The issue is somewhat confused, especially in young capitalist countries, by the fact that some employers do work themselves. To the extent then that they do useful work, part of their incomes is earned, but most of them do not work at all, and in any event are not compelled to do so. In our modern huge joint-stock companies the shareholders never come near the factories and workshops. They may live on the other side of the world, or die, and still the shares would continue to bring in dividends.

We say that it is this private ownership which is at the root of our problems, and we propose that society should take over the means of production and use them, the only sensible suggestion to satisfy the needs of the members of society, instead of allowing a class to make a profit out of their use.

At present we have the workers compelled to ask permission of the owners before they can get to work, and the condition on which permission is granted is that the workers should keep the owners in idle luxury.

And this private ownership has other evil effects besides being a means of robbing the workers.

Over the whole capitalist world we have the workers producing goods of greater value than they receive back as wages, the difference being a surplus for landlords, bankers, and manufacturing capitalists. So that after the workers have spent their wages there is still a great mass of goods in the warehouses which the owners must sell before they can realise their profits, and it is much more than they can possibly consume themselves. It is in this way that unemployment is caused. The people who own the goods want to sell but cannot find buyers, while the workers who want the goods have no money to buy. Production has to be curtailed, and goods are wasted or slowly consumed by the unemployed who live on doles and other forms of relief. Alternatively, capitalist countries are forced to go to war to try to snatch markets from their rivals, and destroy their powers of production. But whether they win or lose, the problem is only aggravated.

This is the capitalist system, and we propose to abolish it. We want to destroy entirely the right of any individual or class to live by privately owning something which society wants to use. We say this results in robbery, and we are out to end it.

But this is not the Labour Party’s object; therefore, we are compelled to oppose that party. We do not want to see them running capitalism even if they could do it better than the older parties. Australian Labour governments, in the words of Premier Theodore, went into office to “administer capitalism.” We do not want anyone to administer capitalism; we want to destroy it.

Moreover, we do not believe that any government can make conditions under capitalism good for the workers. Mr. E. J. Holloway, ex-president of the Australian Labour Party, and General Secretary of the Victorian Trades Council, writing on the lessons of the Labour governments, confesses that while they have been able to make

  conditions a little better they have reached their limit, and no real or permanent improvement in modern society can be effected unless we begin to bridge over that great gulf which exists between the rich and the poor. . . . This cannot be done unless the Government . . . begin to transfer from private ownership those agencies of wealth production and distribution which produce and distribute socially necessary commodities. ( Labour Magazine, December, 1923.)

Now no government can attack the property of the capitalists without a mandate, and no Labour government in Australia had such a mandate. Until the workers understand and want socialism, they will never put into power a government able to undertake that great task, and the only alternative to socialism is the continuance of capitalism. But the harm done by the Labour Party is to spread the false idea that there is another solution not involving the abolition of capitalism. This is called “nationalisation,” but it is, in fact, merely capitalism in another and worse form. The Labour government compensates the present owners by giving them interest-bearing bonds (5 per cent, bonds are promised to British landowners by the Labour Party) or else they are paid out with money raised by loan. In either event we still have a class living by owning, robbing the wealth producers. We still have the capitalist system, and it is probable that many land-owners would actually be better off with a sure 5 per cent, than they are now !

The Labour government would have to pay this interest and make the industries a financial success in competition with home or foreign rivals, and would be forced whether it wished or not, to keep down the worker’s standard’ of living to the general level. Australian Labour governments have to find the agreed rate of interest on loans, and to do this they have had to beat down the wages paid to the workers. Once committed to the task of  “administering capitalism,” the choice is between ruin or an increased exploitation of the workers, either by longer hours, harder work, or lower pay. How else can an industry pay dividend to the bond-holders and compete with other capitalist producers. The workers are poor in Queensland because of the tribute levied on industry by the capitalists for whom the Labour government must act as a slave driver.

The Labour Party here also seeks to attain office without a mandate to overthrow capitalism; therefore, we cannot support it. At the recent election the Labour Party’s programme contained no reference, explicit or implied, to socialism. When they come into power they will, therefore, be impotent to remedy the worker’s poverty or abolish unemployment. The leaders do not promise to abolish profit-making.

It is no part of Labour’s policy to establish revolutionary socialism or to confiscate private property.—J. R. Clynes (Glasgow Evening News, 4th October, 1923.)

The Labour Party demands:—

      nothing more than the nationalisation of the land, mines and essential public services, and this does not carry the Labour Party further than many Radicals, who would vigorously disclaim being socialistic, are prepared to go:— Philip Snowden. (Manchester Guardian Supplement, 26th October, 1922.)

Mr. Snowden, in the House of Commons, on March, 20th, 1923, when speaking on the motion condemning the capitalist system, expressly stated that the Labour Party always repudiated confiscation. How can the capitalists be denied the right to live by owning property unless that property is “confiscated””?

J. H. Thomas, in “When Labour Rules” (page 24), states that

  Capital will be entitled to some return. He also says that all that we claim is a first charge on industry to the point of a reasonable share in the decencies and comforts—net luxuries, note —of life. . ..

Why the workers, who produce necessities and luxuries alike, should hand over the luxuries to a parasite class Mr. Thomas does not explain.

Mr. Ramsay MacDonald, in “Socialism, Critical and Constructive” (1921, page 196), is quite definitely opposed to the idea of abolishing the right to live by owning.

  The right of inheritance is unassailable except in communities based upon pure communism, and for my purpose they need not be considered; but, from a social point of view, the powers of inheritance might with advantage be strictly limited. (198.)
To limit profits by taxation is no easy matter, but the problem will have to be faced. What, for instance, is to be the basis upon which the legitimate profit is to be calculated? Is it to be the dividend on watered capital, or on capital in economic use? Is it not to be a dividend on capital at all, but a profit on the turnover and trade ? (209.)

We say that profit-making is robbery. What then is a legitimate rate of profit? And if the members of the Labour Party believe that profit-making is legitimate, should they not cease to denounce the capitalist system, and ought they not to avoid confusion by recognising that their object is not socialism?

Sidney Webb, in his “Constitution for the Socialist Commonwealth of Great Britain” (1920), deals with the question, too.

   Each owner should receive in compensation the fair market value of that of which he is compulsorily dispossessed.  . . . The community will, of course, be saddled with the interest and sinking fund, or the annuity; and will thus, on the face of it, be no wealthier than before; just as the expropriated person will be no poorer, and the aggregate tribute on production levied by ownership no less than before. The object of “socialisation” is “socialisation” —that is to say, the transformation of profit-making enterprise into public service; not the enrichment of the community by confiscation, (page 334.)

It would require all the subtlety of the professorial mind to convince me that the act of socialisation really does mean leaving things as they are.

It is true that Webb goes on to talk about the ultimate and gradual extinction of living on interest by the power of taxation, but he fails to explain why the capitalists, who will resist confiscation, will submit quietly to the same progress if only it is called by another name. He gives no reason whatever why the workers should— once having attained power—set up a new vested interest, a “rentier” class.

To sum up, therefore, we see that capitalism is the enemy, and that socialism is the only remedy. Socialism necessarily means the denial of the right to live by owning. All who can work must work in order to earn the right to enjoy the products of labour. Socialism can be introduced only by a socialist electorate, and the present owners, as a class, cannot be expected to yield their rights until they must. The Labour Party does not condemn the system of living by owning, at best it only proposes to limit the rate of profit. It is not committed to socialism, is not composed of socialists, does not seek election on a socialist programme, and, therefore, whatever the will of those elected, they will be impotent to advance the cause of socialism. Its attempts to patch up an obsolescent system of society will fail, and end in its own undoing. It cannot give the workers that comfort and security which alone can end their discontent, without attacking the foundations of capitalist society. Those who set their leaders the impossible task of solving the insoluble contradictions of capitalism will themselves be responsible for the inevitable disillusionment and betrayal. The issue lies in the hands of the workers. We appeal to your intelligence, confident that soon or late, the brutal pressure of economic forces will compel consideration and acceptance of our case—the case for socialism.

Edgar Hardcastle