Surplus and Exports: An explanation
It is said that accidents will happen in the best-regulated homes; and it can occasionally happen that a writer and the Editorial Committee have both sat up too late and a mis-statement appears in the Socialist Standard.
In the October issue, in the article “The Crisis: Wilson’s Lame Explanation”, the following appeared (page 184, para. 3):
It follows therefore that the working class as a whole are not paid enough to buy back the goods they have produced. The “export drives” typical of all industrialized countries are evidence of this need to sell abroad the surplus which workers in the country of origin cannot afford to purchase . . . But, like taking in each other’s washing, it is a futile endeavour when all countries are trying to do the same thing.
This, we are afraid, is thoroughly incorrect. It resembles a theory held at the beginning of this century, that capitalism would eventually collapse because all countries had unsaleable surpluses on their hands. (This is the economic argument of Jack London’s The Iron Heel, published in 1907.) The SPGB never subscribed to that theory, and we hasten now to put matters straight.
It is true that the workers cannot buy back all they produce, but this does not explain economic crises; if it did, there would be no such thing as a boom, and crisis would be continuous. The surplus is used largely by the capitalists themselves for reinvestment in industry, when conditions are favourable.
When (as now) the conditions are unfavourable, workers are laid off — not because the surplus is an embarrassment but because goods produced cannot be sold.
As the article said, British manufacturers have to compete in foreign markets. However, this reflects not the need to dispose of a surplus but the normal working of capitalism in which all production takes place for sale at a profit: indeed, under-cutting of prices is sometimes achieved by investment in new machinery. The reason why trade often has the anomalous appearance of “taking in each other’s washing” is that commodities are produced more cheaply in some countries than in others. In a period of trade depression this is observed and commented on — e.g. that foreign cars are widely sold in Britain — but it goes on all the time.