Editorial: This money business
Socialists do not hold that “money is the root of all evil”. (And before knowledgeable readers rush for their pens to let us know that we have the quotation wrong, Socialists likewise do not hold that it is the love of money that is at fault.) What Socialists hold is that the root evil of the modern world is Capitalism, the social system based on private ownership of the means of production and distribution. Capitalism presupposes the existence of an owning class and of a working class, and the whole arrangement for producing goods and services for sale at a profit. Money is a necessary part of Capitalism. It is not the root, but a rank, festering jungle growth on the surface in which the world’s population blindly gropes its way.
The way the Socialist views this jungle growth is quite unlike the way of the various non and anti-Socialists. This is an acid test and it separates the Socialist from all the others. When the Liberal or Tory believer in Capitalism says “Of course you can’t do without money,” he is at least talking a sort of sense, for what he means is that you can’t have Capitalism without a money system. But the Socialist has no desire to keep Capitalism and knows very well that if you have Socialism you do not need and could not have a money system.
It is at this point that the Labourite and Communist joins the Liberal and Tory and echoes their jibe that nobody in his senses really believes in a world without money. Which just goes to show what a deplorable effect the Labour and Communist policy of running Capitalism has had on their ideas. Half a century ago not only Socialists but also the pioneers of the organisations that eventually produced the Labour and Communist parties were quite familiar with this proposition and felt no need to break into asinine guffaws about it. They knew then that this was an essential part of Socialism. Now their successors are deeply shocked by the suggestion, which comes to them out of their forgotten past as from another world. They have handled Capitalist problems so long that they are Capitalist-minded. Now they line up with the open defenders of Capitalism to produce their muddled plans for dealing with dollar gaps, balance of trade deficits, inflation, direct and indirect taxation and all the rest of the rigmarole. And what a rigmarole it all is.
Let us ask them one question. When they say “you can’t do without money,” what is it they think they are doing with the money system. Anyone who wants a good laugh should go to any of the orthodox economic text-books and read about the functions money is supposed to perform, or alternately go to any Labour or Communist electoral programme and compare their promises of what they would do with what they actually do when in office, here or in Russia. One of the jokes in the textbooks is that money is “universally acceptable.” Apart from dollars and gold bullion there is hardly a currency in the world that meets this requirement. Or take the nearly universal swindle of the past quarter of a century practiced on depositors in savings banks. Authority assures them, and they believe, that they will get their money back, with interest; in fact they get back depreciated currency which will buy far less than the amount originally deposited.
It isn’t only Socialists who are critical of the ever more complex monetary and taxation systems. Money is supposed, according to the textbooks, to smooth the working of industry, promote greater production and in particular to facilitate efficient international exchange. Yet, what do we see? In America farmers have for years been paid money to increase production., Now the stuff has piled up into mountains of unsaleable surpluses while elsewhere in the world, and in America itself, are millions of undernourished people who cannot afford to buy it.
On this ponder the Economist (June 9, 1956):—
“Farmers will soon be ploughing growing crops back into the ground under Government auspices, something they have not done since 1933.”
The American Government is now going to stifle production by paying farmers to take land out of the cultivation of cotton, maize, wheat, rice, tobacco and peanuts. But because the Bill could not be passed in time by Congress some of these crops are already growing and to get the money from the Government for not producing crops the farmers are being allowed to plough them in. Mr. John O’Rourke, editor of the Washington Daily News, who is in this country, read about the English titled lady who was ejected from her farm for not producing enough crops (for which incidentally British farmers likewise receive government subsidies). So Mr. O’Rourke wrote to the Daily Express (June 11, 1956) suggesting that this crazy muddle could be straightened out by a trans-Atlantic switch; let the English lady lease her unproductive farm to an American who could then be paid for not having produced, and in return she could hire an over-productive American farm and be paid by the English Government for producing more. Would this be crazy? Surely, but not more so than the reality.
And in face of this, the empty-headed opponents of Socialism tell us that it would not work!
Now take a glance at two believers in Capitalism and see what they have to say about their money system. First, Mr. George Murray, who in the Daily Mail (February 20, 1956) had an article “Is Money Out of Date?”
“Between the wars Britain tried deflation as the remedy for her currency troubles. The result was that prices and wages fell. We had to drive such hard bargains with our overseas suppliers of food and raw materials that they could not afford to buy our goods. We had chronic unemployment. To-day we are hell-bent for inflation. The result of this is that the price of our goods is forced so high that our overseas customers still cannot afford to buy them, though they are much better supplied with money. And we have ‘overfull’ employment”
Mr Murray, who, of course, does not really/believe that money is “out of date,” lamely ends with a “plea for finding, somehow or other, some means to strike a balance: as if Capitalism ever did, or ever could provide price stability and an uninterrupted flow of production and sale.
Lastly, there is the witty and sometimes shrewd economist who is permitted by the Sunday Times to poke irreverent fun at our rulers and their financial antics, Mr. George Schwartz. In the issue for April 15,1956, he discussed the popular but quite baseless belief that Chancellors of the Exchequer are really able to master the monetary monster nominally under their control. Mr. Schwartz doesn’t think that Mr. MacMillan even understands the simpler aspects of monetary policy such as the connection between the note issue and the price level; but even if he did, it is Schwartz’s opinion that the whole thing is now hardly comprehensible or controllable. Here is a typical passage:—
“Who’s in charge of it? I can tell you that right away. No one. Of course, Chancellors talk largely of operating switches and of pulling plugs as if they were in charge of a control panel that registered the pressure in every part of the kingdom, and the outside world as well. But it is nothing like that. A Chancellor to-day is confronted with a vast refuse heap of smouldering fiscal expedients that have piled up over the past fifty years. On Budget day he can only make elaborate flourishes and then deliver a few pokes at the accumulated rubbish. If he did any more it might come down on his head or burst into flames. At the end of this ritual the Chancellor mounts the pile for a peroration, and for the rest of the week there is a rattling of the lids of empty dustbins which passes for a debate.”
Mr. Schwartz delivers many more blows at the monetary and fiscal system, and ends by demanding at once and just as a first instalment the instant abolition of purchase tax, entertainment tax and the distributed profits tax. But does Mr. Schwartz believe that this will be done? and if it were would it seriously diminish the monumental muddle? Capitalism is a mess, of which its monetary contortions are a symptom. There is no cure within Capitalism. There is even little chance that it will ever get back to the crude but less complicated monetary chaps of the 19th century. Socialism offers the only way and by comparison its proposition that people of the world shall co-operate to produce what the world needs and provide free access to it, without ownership, sale or profit, is simplicity itself. And if you think it still sounds shocking in its simplicity, a little thought about it will soon rid it of its terrors for you.