1930s >> 1933 >> no-341-january-1933

Notes By The Way: The Depression not Due to Gold Shortage

The Depression not Due to Gold Shortage

It did not take long for the facts to disprove the argument that gold shortage was the cause of the depression, and each month the mounting figures of gold production confound the forecasts of a progressive decline. According to the latest figures (Evening Standard, October 21st, 1932) it is estimated that the mining output this year will exceed that of 1931 and all recent years, and will be nearly equal to the record output of 1915. In addition to the increasing output of the mines, hoards of gold are being released from India, China, Russia and Australia.

The gold stocks of 48 central banks and governments are now about £2,500,000,000, which represents an increase of 16 per cent. since August, 1928. It is obvious that if a smaller quantity of gold was sufficient to carry the vastly greater volume of trade in 1928, the present depression, which coincides with a larger quantity of gold, cannot be due to gold shortage.

On the day following the above report about gold reserves, it was announced that a new 40-mile extension of gold-bearing ground on the Witwaterrand had been discovered (Evening Standard, October 22nd), promising a further increase in gold production.

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A Useless Sacrifice

The official policy of the Communist Parties, many times re-affirmed, is that the only road to the conquest of political power is by street-fighting, leading on to civil war. The S.P.G.B. rejects that view on many grounds. One of them is the useless sacrifice it involves for those who actively adhere to it, useless to the Communist Parties and to the working class. A recent Court case is worth notice. Mr. Sidney Elias, a Communist paid official, was charged with inciting other Communists to stir up “hunger marchers” to commit acts of disorder. The jury found him guilty and he was sent to prison for two years, which means that he will be prevented for that period from assisting his party to propagate its views, and when he is released he will be physically and mentally less fit to carry on that work than he is now.

Against this the Communists will argue that the case has a propaganda value in that it enabled Elias to gain publicity for his party’s principles. In fact—as usually happens in trials of Communists —instead of boldly declaring his principles he allowed his counsel to repudiate them on his behalf. He said that there was no evidence that the letters written by him actually reached the Communists who were alleged to have been incited to disorder. He denied that they were incited. He said that when he used the words “fight” and “struggle” he meant them “merely in the political sense”; and that the letters only urged demonstrations, and “demonstrating was a perfectly legitimate way of manifesting one’s sense of grievance.” (Report in Manchester Guardian, December 13th). In short, the propaganda effect of the trial is merely to broadcast the impression that the Communists are misrepresented people who really stand by constitutional methods. In other words, the defence put up at the trial was a repudiation of the Communist policy of street-fighting and civil war.

The whole thing is futile and regrettable, both from the point of view of Sidney Elias and from the point of view of any unfortunate workers who may have been influenced by the stupid Communist propaganda.

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A Curious Sidelight on Empire

The conflict between China and Japan produced a strange incident, which is recorded in the New Statesman (October 8th). On March 11th, the League of Nations Assembly decided to set up a negotiating committee. The British Government, whose actions had shown distinct leanings towards Japan drew up a list of governments to be members of the Committee. The smaller powers, whose sympathies are with China, drew up an alternative list, including South Africa. The two lists were voted on, and although South Africa is in the Empire and Portugal is outside, Portugal was appointed and South Africa defeated by one vote, the vote of Sir John Simon representing the British Government. The “ties of Empire” are not allowed to interfere with the economic interests of the British capitalists.

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The I.L.P. and Electoral Reform
Mr. Tom Kirk, who a year or two ago confessed that his party—the Labour Party—had never preached Socialism, and that only the S.P.G.B. had stood by Socialist principles, is now in the I.L.P. (Maxtonite). He states in the Railway Review (November 18th, 1932) that the Labour Party agreed with the Liberals and Tories to the clause in the Representation of the People Act which compels Parliamentary candidates to deposit £150, because they saw that it would hamper ‘the small and poor organisations (the S.P.G.B. for example). Mr. Kirk calls this a “dirty agreement,” presumably because the I.L.P. (which has now lost those of its supporters who used to donate money by the £100 and £1,000) will itself be hampered by the clause in future.

It would, however, be interesting to . know whether the I.L.P., when it had plenty of money, ever protested against the dirty agreement.

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Is the Russian State “Withering Away”?
The Marxian view of the State has caused a good deal of embarrassment to the Bolsheviks in their efforts to square the actual situation in Russia with the idealisation of it which they offer in their propaganda. Engels’ words about the State “withering away” have compelled them to indulge in all sorts of contortions. Engels wrote:

  The first act by virtue of which the State really constitutes itself the representative of the whole of society—the taking possession of the means of production in the name of society—this is, at the same time, its last independent act as a State. State interference in social relations becomes, in one domain after another, superfluous, and then dies out of itself; the government of persons is replaced by the administration of things, and by the conduct of processes of production. The State is not “ abolished.” It dies out.

(“Socialism, Utopian and Scientific,” by F. Engels. Swan Sonnenschein Edition, 1802. P. 76.)

The Communists claim that they are building Socialism in Russia and that they have performed the act which—in Engels’ words—should prelude the withering away of the State. Some of them therefore take the logical course of claiming that the State in Russia is indeed withering away. Thus the Labour Monthly (a Communist journal) claims in its September, 1931, issue, that

   There are, in fact, in the Soviet Union to-day, with the enormous development of the initiative of the masses, of their participation in the ordering of social life, and with the advance towards abolishing the distinction between town and country, elements of this “withering away” already perceptible. (p. 588)

Unfortunately for the Labour Monthly Molotov, Chairman of the Council of People’s Commissars, admits that this is not the case. In a thesis presented to the 17th Conference of the Russian Communist Party early in 1932, he said, concerning Russia: —

  Not only does the class struggle not end, but in some sections and at some periods it may and will become considerably sharpened

(Labour Monthly, April 1932. P. 246)

Naturally, where there is a class struggle there is no possibility of a withering away of the State, and the Labour Monthly, summarising Molotov’s discussion of this further point, says: —

  The Thesis also considers the question of the “withering away” of the State, but points out that while the establishment of the Proletariat Dictatorship has already transformed the State into a semi- State, the conditions of internal and external class-struggle demand a strengthening of the State in the immediate future. . . . (P. 246.)

It is amusing to be told that the Russian State—which is a fairly faithful copy of the Czarist Government in respect of its bureaucracy, its political police, and its arbitrary use of its repressive powers—is a “semi-State,” whatever that is supposed to mean. But the cream of the jest is Molotov’s further remark that the Russian State is to be strengthened in the immediate future “as a condition for its eventual ‘withering away.’ ” Lloyd’s George’s “war to end war” has nothing on this.

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Can the Capitalists Afford Reforms?

Mr. George Hicks, in a pamphlet, “The Struggle for Socialism,” puts forward the incorrect notion so much favoured now by the Communists and the I.L.P. that the capitalists are so poor that they cannot afford to buy off working class discontent with any more reforms. Mr. Hicks says: —

  British Capitalism, in relation to World Capitalism, is in such a fix that it is sheerly impossible for it to grant ameliorative measures to the workers. It is in a condition of stagnation and decline. It can give no reforms, make no concessions. Gradualism, Reformism, Fabianism, Lib-Labourism—all those “isms” which enabled the Labour Party hitherto to make its broad appeals—have experienced a withering at the roots.”

In spite of being widely held among the reformists, this doctrine is utterly untrue. In spite of the impressive-looking figures which represent the cost of the so-called social services—education, old age pensions, unemployment pay, etc.—the capitalists spend only a very small part of their wealth on them. The absurdity of the argument can be illustrated in another way. Since 1921 wage reductions recorded by the Ministry of Labour total something like £600 millions a year, which far exceeds the whole cost of the social services. That is to say, the amount saved to the capitalists by cutting their labour costs far exceeds their total expenditure through taxation on protecting the workers against the worst effects of exploitation.

Prophecy is dangerous, but it is safe to say that as soon as the capitalist parties find that the only way to win elections is to promise more “reforms,” they will vie with one another at it just as they have done in the years 1918 to 1929.

Already at a Midland town the Tory members of a Public Assistance Committee have found their activities so damaging to them in the local elections that they have refused to work it unless the Labour members of the local Council will sit on the P.A.C. with them.

Hardly was Mr. Hicks’ pamphlet off the press when the Government announced its slight concessions over the means test.

Incidentally, if it were true, and the electors were aware, that capitalism could give no more reforms, Mr. Hicks—who got elected to Parliament by promising reforms—would stand very little chance of re-election on his reform programme.

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Lands Without Unemployment

Just at present, while the building of factories, railways and productive equipment of all kinds enables the Russians to claim that unemployment is at a minimum and that paying unemployment relief is unnecessary, the I.L.P. adds its voice to the chorus—of praise for the “land without unemployment.” Those who know the chequered history of the I.L.P. and its almost complete ignorance of the working of economic forces will be less impressed by what the I.L.P. says about Russia than by what it formerly said of America, France, Belgium, Australia, Italy and various other spots in which the I.L.P. has discovered capitalist “solutions” for the problem of unemployment.

The Socialist Programme,” published by the I.L.P. in November, 1923, tells us that

  general unemployment has nothing to do with tariffs or free trade. It is determined by the monetary policy pursued by a country and not by its tariff-policy. (P. 26.)

So they looked round to see if they could find some countries pursuing an I.L.P. monetary policy; and sure enough they found several.

  That is shown by the facts of unemployment in the world to-day. There is none to speak of in France and Belgium, very little in Italy, nor has there been ever since the war. Why? Because the Governments and central banks of those countries have never restricted credit and thus destroyed the purchasing power of a large part of their populations. (P. 26.)

America, according to the I.L.P., was not merely perfect, it was better than perfect; not only no unemployment, but a shortage of labour—

  The banks have lent freely, and there is now an actual shortage of labour . . . There is no unemployment and no depression in the United States today. (P. 27.) (Italics ours.)

The I.L.P. was, of course, largely wrong about its facts and wholly wrong about the effects of applying its capitalist credit theories. In due course they had to admit this, and a writer in the New Leader said of the American banking system:

  I gather from some enquiries that we in England have gravely over-estimated the scientific work of this banking organisation.

(Brailsford, New Leader. Feb. 24th, 192ft.)

In the same way the I.L.P. will discover before long that they have “gravely over-estimated” the possibilities of planning Russian production and distribution in conditions which both at home and abroad are essentially capitalistic and which therefore preclude planning and preclude the solution of the unemployment problem.

In Russia some phases of the problem have been the enormous number of workers constantly in process of leaving one job and travelling elsewhere to look for a better one, and the over-population of the villages. Recently the Government has tried to check the former by imposing penalties on workers who leave their jobs, and has at the same time drastically cut down the staffs of State concerns in order to make them more profitable. In due course Russia will again have to recognise and deal with the normal capitalist problem of serious unemployment, and the I.L.P. will have to set sail for some new mythical paradise.

Edgar Hardcastle