Book Reviews

Fences and Windows. By Naomi Klein. Flamingo, 2002.

The protests in Seattle, London, Genoa and many other places between 1999 and 2001 gave rise not just to labels such as J18 but also to a widespread movement known variously as anti-corporate, anti-globalisation and even anti-capitalist. Naomi Klein’s book No Logo came to be seen as a manifesto for this movement, and Klein herself as a spokesperson for it, despite her protestations to the contrary on both counts. No Logo (on which see the Socialist Standard for December 2000 and August 2001) chronicled the rise of massive global companies such as Nike and McDonalds, and of resistance to them. Klein’s latest book is explicitly not a follow-up to her earlier work, though inevitably it deals with similar issues.

Fences and Windows consists of a selection of Klein’s journalism and speeches, mainly from 2000 and 2001, and this is both its strength and its weakness. It gains immediacy from having been written in the midst or the aftermath of demos, protests and large-scale discussions, but lacks any overall theme or coherence. Nevertheless, a number of topics that it deals with can be singled out. The fences of the title are the (literal and metaphorical) barriers that prevent people from protesting, from using various resources and from gaining access to education and so on. And the windows are the various kinds of opposition, from mass efforts at direct democracy to landless Brazilian farmers cutting down fences around unused land.

A chapter written in Prague is interesting for what it reveals of the views of many young Czechs. They see both capitalism and “communism” (read: state capitalism) as centralising power in the hands of a few and of treating people as less than fully human. The issue is not whether the state or multinationals are in power, but of how power is distributed. As argued in other pieces, poor countries are required to follow the economic rules laid down by the rich – who then disregard them themselves when they see fit. Post 9/11, even Canada has been forced by the US to toughen security at its borders, and give up a great deal of control over them to US security officials.

The power-holders have of course not just sat idly by while the protesters make their protests. As a way to avoid the objectors, they have moved some of their meetings to virtually inaccessible places. More worryingly, protest and dissent have themselves been criminalised, with police violence becoming more or less the norm, with prominent resisters being arrested on trumped-up charges and so kept out of the way during demonstrations, and with all civil disobedience being equated with violence. (This has become worse since the invasion of Iraq, especially in the US, with any protest regarded as helping “the nation’s enemies”.)

The final section of the book turns to positive proposals. A chapter entitled “Limits of Political Parties” attacks the New Democratic Party, Canada’s nearest equivalent of the Labour Party (Klein is herself Canadian, and this piece originally appeared in a Toronto newspaper). Klein notes that the most socially excluded parts of Canada’s population support “an idea entirely absent from the mainstream left: a deep distrust of the state”. While the NDP advocates strong interventionist central government, a true left-wing party should “articulate a different vision, one founded on local democracy and sustainable economic development”. The last chapter proposes a merger of two forces, international anti-globalisation activists and community-based organizations.

But there is still no real picture of a society to replace capitalism, or of what the real implications of local democracy and sustainability might be. These cannot be valued or implemented in a world divided along the lines of class and nation, where profit is the priority. A thoroughgoing change to a world without classes, nations, governments or profit is needed. Sadly, Klein and the rest of the anti-globalisation movement, despite the sincerity and effectiveness of much of their critique of capitalism, have taken the first steps but have yet to see through to the genuine alternative.
Paul Bennett

Free Lunch. Easily Digestible Economics. Why there’s no such thing as a free lunch. By David Smith, Profile Books. £8.99

This book, written by the Economics Editor of the Sunday Times, aims to give a readable account of what economics – modern bourgeois economics, that is, of course – says, directed mainly, it seems, at the sort of people that invest some of their savings on the stock exchange and want to know about the wider factors that can influence their “investments”.

Modern bourgeois economics tries to explain economic phenomena without any concept of “value”, and it is this that makes it inadequate. For instance, to argue that price is determined by supply and demand, an argument Smith repeats, doesn’t get you very far since it does not explain why the price at which supply and demand balance for one good is different from what it is for another. This can’t be explained without introducing the concept of “value”, as was well understood by the first bourgeois economists, Adam Smith and David Ricardo, whose views Smith discusses.

It is the same with explaining the origin of profits. It is all very well saying that, to maximise profits, a firm will, or should, go on producing until the marginal cost of its product equals the marginal revenue obtained from selling it. But this doesn’t explain profits. It doesn’t explain why “revenue” should include an element of profit rather than merely being enough to cover costs. Here again, the way out is to use the concept of value and, in this context, surplus value.

Smith’s attempt to explain Marx’s labour theory of value is pathetic. He attributes to Marx the view that the value of a product is determined by the labour cost at the last stage of its production. Thus, the value of a television set would be equal to the wages bill of the factory where it was produced. Obviously, he has no trouble demolishing this absurd view. In fact, Marx followed Ricardo in saying that the value of a product was determined by the amount of (socially necessary) labour incorporated in it from start to finish – from raw materials to finished product, ready for sale – and not just at the last stage. Smith, incidentally, omits to mention that both Adam Smith and David Ricardo adhered to a labour theory of value, even though a less coherent one than Marx’s.

Smith makes Marx explain profit as something that “capitalist exploiters” simply add to the labour cost of the product. This was not Marx’s view, but at least it would be a theory of profit, albeit a mistaken one; which is one step ahead of Smith and modern bourgeois economists generally who offer no theory at all as to the origin of profit.

Ironically, although modern bourgeois economists try to operate without a theory of value, Customs and Excise has re-introduced the idea and the term via “value-added tax”. This is a tax levied on the difference between the price of all the material inputs at any stage of production and the price at which, after being worked on, it is sold on to the next stage. This difference is officially called “value added” and in fact consists of the wages and salaries paid to the workers and the profit of the employer. And it does correspond (more or less) to what Adam Smith, Ricardo and Marx meant by new value created during the process of production. For Marx (though not for the other two), the wages/salaries part of “added value” would represent the value of the labour power the workers had sold to their employer while the rest, still part of the new value they had created, would be a “surplus” over and above this – surplus value”, therefore – pocketed by the employer as profit.

When explaining Gross Domestic Product (GDP) and related concepts Smith mentions that some people “prefer to talk, not of GDP, but of ‘gross value added’”. It’s a pity a lot more don’t share this preference, as it brings out more openly that profits derive from the new value added by the wealth-producers in the course of producing some good or service.

After pointing out that in the UK in 2000 consumer spending represented 63 percent of GDP, Smith says that this means “consumers drive our economies”. But this does not follow. Nor is it the case. It is merely part of the ideology used to project capitalism as a system geared to meeting consumers’ needs. Smith himself knows full well that a capitalist economy is not “driven” by consumer demand but by other factors, essentially the 17 percent of GDP represented by “investment”, i.e. reinvested profits, the part of surplus value that is accumulated as capital. After all, this – capital accumulation – is why capitalism is called capitalism.

Smith drops the pretence that “consumers drive our economy” when, later, he discusses growth and the business cycle. On growth, he writes, one expert (Maddison):

“has produced results that suggest investment other than in housing is the most important source of growth, with significant contributions also made by rising educational standards, trade and, for most countries, a ‘catch-up’ effect as they adopt the technology or methods used by countries with higher productivity levels. Extra investment, the main source of growth, does not always flow smoothly. It is subject to – indeed is one of the primary causes of – the business cycle”.

On business cycles themselves, he mentions another theory that “the traditional Keynesian solution of trying to prevent recession by increasing government spending is misplaced”.

If he had read his Marx, he would have realised that Marx got there first, explaining that capitalism is driven, not by consumer demand, but by the drive to make and accumulate profits as further capital and that this is by no means a smooth process.

Smith, however, doesn’t get everything wrong. He realises that “inflation” is not just any price increase but “a general increase in prices” and also that banks can’t create credit by the stroke of a pen but “have to ensure that their deposits and loans are in rough balance”.

Adam Buick

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