Ridiculous economic moonshine

Economists zigzag from forecasts of gloom and doom on the one hand to rosy reassurance on the other. In the first group, we should include Dr. Ralf Dahrendorf of the London School of Economics who asserts that we shall never again see unemployment as low as 2 million. His crystal ball seems distinctly murky. In the other group is Arthur Seldon, doyen of the Institute of Economic Affairs. It is his view — stated in a debate against the SPGB recently — that capitalism is going to continue, whether we like it or not. Since he is a supporter (and publisher) of Dr Hayek — a firm believer in the benevolence of the market economy — Seldon can be termed an optimist.

Seldon told his audience that according to Adam Smith man has a “natural urge” to exchange things. (What did Smith know of genetics, or even biology?) This “natural urge” could only be overcome by “unselfish love” as preached by Christians. We note, in passing, that the Christian religion has featured conflict in Northern Ireland, and that most of those in the West who have developed and stockpiled nuclear weapons are Christians.

Seldon had a startling approach to economics. He told the audience that if we owned any property we should be regarded as capitalists, and even suggested buying a car or a house on the never-never as a means to become so. Even a push-bike would qualify one, it seemed. If the Seldon theory is right, it follows that we workers must be crazy to work for wages — giving away so much unpaid labour every working day. After all, if we are the capitalists, we could just sit back and wait for the dividends to accumulate without any effort from us, as they are derived from the unpaid labour of the philanthropic working class. (If every car, bike or house buyer is a capitalist, who are the working class?) In fact, capital is wealth which is used to create profits. A car owned by a car-hire firm is capital; one owned by a worker to help him get to work is not.

The prize for the silliest statement on economics must go to a Labour Council candidate who quoted from a textbook he claimed to have studied when learning how to be a banker. Here it is:

“Money is a “medium of exchange for goods and services, without intrinsic value” (our emphasis).

It seems, then, that humans have a “natural urge” to exchange commodities of real value (a house, car, bike, or our time and labour) for something of no value! The way the system actually works is surely quite crazy enough without these potty professors and pundits giving us confusion worse confounded.

Obviously, money has some value. To start with, it has a use-value, derived from its function (at least in a market economy) as a medium of exchange, as the “universal equivalent”, so that we no longer have to barter goods, swapping TV sets, carpets, cars and coats-as children swap conkers and marbles. Money also has exchange value. This is measured by the amount of socially necessary labour-time used up in producing it. Whether solid gold sovereigns or today’s paper flotsam, money always costs some labour time to produce. It is an indication of how debased our much-inflated currency has become that economics students, would-be bankers, Chancellors of the Exchequer and the like, are actually taught that money is “without intrinsic value”.

One would have to be daft as a brush — or a Labour Councillor — to believe that such a statement holds good in the real world. Do we pay the same amount of money for 6 eggs as for 1 dozen? If our money has no value, why should the shopkeeper ask us to pay at all for these eggs? If the money we get as wages has no value, why do our employers object to giving us more of it? Indeed, if the money we earn as wages has no value, why should we sell our labour power for money we should insist on payment in kind, in goods which do have a value. And how strange it is that bank managers are so reluctant to give away these tokens “without intrinsic value”.

An unusual industrial dispute is going on in London where workers at the Time Out magazine are on strike. It seems that the owners want to scrap the existing agreement. All workers at Time Out get the same pay — switch-board operators and editors are all paid the same. The owners, far from being proud to have pioneered such an egalitarian policy, are rather ashamed of themselves. Maybe Thatcher and the CBI have expressed disapproval. Whatever it is, both sides are now locked in dispute on this point.

The fact is that, however agreeable it may seem for all workers to earn the same, there are economic factors which make this impossible as a general rule. At Time Out, editors are earning less than they could get elsewhere while switchboard operators and other “menials” are earning more than the going rate. Result: while Time Out is a switchboard operator’s idea of a well-paid Paradise (probably there is a queue for the next vacancy) the owners may well find it hard to keep their editors. It takes more to train a good editor than a competent switchboard operator: the one requires a high level of education and a long and specialised training, the other is a job which can be taught relatively fast to almost anyone. Labour power is a commodity and its value (and consequently its price) will depend generally on its cost of production and reproduction.

“Equal pay” carried to the Time Out extreme is economic moonshine, almost as ridiculous as Arthur Seldon’s idea that owning a car can turn a worker into a capitalist, or the textbook’s teaching about money being without value. The only sensible approach to the economics of capitalism and the world we actually live in is one based on Marx’s labour theory of value, which shows us why money does have value and why different workers earn different rates of pay under normal conditions. And it is this theory which shows how we, the working class, the wealth-creating class, are exploited by giving away our unpaid labour to the capital-owning class.

C. Skelton
(A pushbike owner)

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