1960s >> 1965 >> no-726-february-1965

Food burners at work again

Ever since socialists first appeared and made the case for abolishing capitalism, they have had to contend with opponents voicing variations on the common theme of retaining that system. The different groups did not admit or always realise that they were at one in defending capitalism, and outwardly they did not even seem to be united. There were those who said that capitalism would be quite satisfactory if only governments would stop interfering and impeding—we have a relic still in Mr. Enoch Powell. Others thought that it would work well if people would mend their ways and not be greedy. This group is always with us. And those who thought that the crying need is for better or wiser men at the helm of state — Liberals or Labour when the government is Conservative and Liberal and Conservative when the government is Labour. And those who believe that the system is essentially sound but that its abuses must be tackled as they show themselves in the light of new ideas and through new acts of Parliament. Actually this last category takes in almost all those who in practice hinder the movement to Socialism, including that most ineffectual band who for a century have been saying that Socialism is absolutely necessary but not just now, not until this or that evil has been removed.

 

All of these reformers agree with each other in rejecting the Socialist argument that we can and should have a social system which will have no place for prices, wages, profits etc. They say that the human race cannot do without these things, and in any event has no need to waste time trying to do so because there is nothing wrong with them in principle, only with the way they are used. So at each General Election we start a new round of schemes supposed to rid us of worries about prices, wages, strikes, monopolies and so on.

 

And each succeeding election finds things just the same except that the government and opposition may have changed places.

 

Just at the moment it is prices which occupy pride of place in the list of public complaints.

 

The most common complaint is that prices are “too high” and everybody blames everybody else for it. (Not least the newspapers which have put up their own prices during the past 12 months). All the complainers agree that somebody ought to do something about it, without explaining exactly what should be done and what level of prices would be regarded as just the right one.

 

The very rash might rush in and say that the right level is the lowest level but in the midst of the hullabaloo about prices that are too high there are some agonised cries about prices that are too low.

 

There are several aspects of the problem of prices. First there are the economic laws which explain why different articles have different prices—why an ounce of gold has a higher price than the same weight of silver, and lead a higher price than coal. Basically this is explained by the amount of human labour necessary for the prediction of each kind of article.

 

Then there are the laws which explain the upward or downward movements of the price level as a whole—why for example the general price level here is three or more times what it was in 1938, or why the price level fell heavily and continually for 10 years or more in the Nineteen twenties and thirties.

 

Also there are the upward and downward movements of the price of any article which came under the head of fluctuations due to variations in supply and demand. It is these fluctuations that concern us here.

 

If the supply of an article falls in relation to “demand” prices will go up; and if demand falls in relation to supply they will go down. It works against the background that everyone wants high prices for what he sells and low prices for what he buys and will take advantage of any circumstances which help him to get what he wants. Greedy and anti-social? Maybe, but that is what capitalism is and how it works, and the working of capitalism needs price fluctuations, as a corrective for over and under supply in relation to the demand of the market.

 

Governments do from time to time imagine they can have a price system without its “abuses”: they try to control and reduce prices irrespective of the market conditions, only to find that they have created a “black market.”

 

The people who want a price system but do not want to let it operate are constantly being shocked by demonstrations of the system functioning normally.

 

So it was that between the wars we were told how iniquitous it was that with millions of people in want of food, wheat was being burned. It was burned because there was so much more than the market would absorb that its price had fallen to unprofitable levels. The same was true of coffee and some other commodities. From a human standpoint of course it was iniquitous but how else can capitalism, which produces for the market, operate except in terms of the market ?

 

An alternative to actual destruction is to let the depressed price have direct effect by ruining the producers and thus reducing production. Another it to hold the surplus off the market as has happened with coffee, wheat and other products when the interests concerned are sufficiently influential to get governments to intervene and bear the cost—as in U.S.A.

 

A “simple” solution that is suggested is for governments to give away the surplus, but this aggravates the problem since it both depresses prices and deprives other would-be sellers of a market.

 

The one thing that all the reformers agreed on was that destruction and restriction, and unemployed men and resources, must never again be allowed to happen. Expansion and abundance were on the banners and Keynes the prophet.

 

But capitalism has not changed. Though, as the authorities agree, the number of malnourished people in the world is increasing, burning and restriction are still with us. Last Autumn it was reported from Southern Rhodesia that, following a bumper tobacco crop and falling prices a scheme for restricting production had been adopted. The same wind struck Australia and some 200 tons of good tobacco were burned near Brisbane in December last.

 

Cocoa too has run into trouble. Too much has been produced for the demands of the market and in November last the six countries in the Cocoa Producers Alliance, Ghana, Nigeria, Brazil, the Ivory Coast, Cameroon and Togo decided to destroy cocoa stocks to help keep up the price. The following was reported by the Times on 12th December from Accra:

 

  Sir Tsibu Darku, the Chairman of Ghana’s Cocoa Marketing Board, today put the torch to about 500 tons of cocoa which went up in flames hear here. He said the bonfire was the first of a series which would go on until they had completely destroyed two per cent of Ghana’s basic quota, to give effect to a decision of the alliance of cocoa producing countries.

 

But a Financial Times correspondent last December doubted if this would be effective—”most dealers feel that far more than the present suggestion of two per cent of the six member’s basic quota should be burnt.” He thought they would have to choose between accepting lower prices and restricting production.

 

This, of course, will not prevent the Financial Times from urging greater production as the right policy for Britain and other countries.

 

Brazil is one of the cocoa group worried about the “overproduction,” committed to destruction of some of the surplus. In 1943 the Brazilian Government thought to solve its cocoa problem by nationalising the export of cocoa but gave up the idea in 1952.

 

It was Brazil that was mostly involved in the destruction of coffee before the war. As it is now reported that efforts of coffee producers to keep up prices in a falling market were failing, they may soon again be destroying coffee as well as cocoa.

 

Next on the list may be bananas. Fierce competition of West Indian banana producers has pronounced what is described in The Times (29th December) as “a collapse of the banana market.”

 

A spokesman of the Jamaica Banana Board said:

 

  This is the most calamitous situation the Jamaican banana industry has faced since the war and could be as bad as anything that has ever happened in all our banana history.

 

These are examples of over supply and calamity through depressed prices. But capitalism is nothing if not varied. The People (10th January 1965) has a lament of the opposite kind. There has recently been a shortage of bricks and some other building materials, with the consequence that building orders are subject to long delays in delivery. The result has been a big emergence of a “black market.” You can get a certain type of brick at £12 10s. a 1,000 if you can wait up to a year. But if you like to pay £20 or more you can get immediate delivery.

 

What we shall go on getting is the same old complaints, protests, speeches, committees of enquiry and so on. And capitalism’s price system will continue to operate in the only way it can until the workers get to understand that there really is a solution, to get rid of the price system along with capitalism of which it is a part.

 

Edgar Hardcastle