World Socialist Party (US)

Money - its origins, its nature, and its functions - is a subject laden with superstition and wild theory. Even those who are supposed to know all that is worth knowing about it, the economics experts, frequently find themselves tangled in the intricacies of their explanations. To the nonprofessional  students of Marxian economics the confusions are based primarily on the fact that the training to which the “legitimate” theorists are subjected is geared to the needs of capitalism. To understand the real nature of capitalism, in general, and money, in particular, would inhibit ones effectiveness as an expert and a hired analyst of a society such as capitalism. It is better for those who own the means of wealth production and who hire the experts that inhibiting factors in their expertise be not encouraged.

AN ENTERPRISE’S RATE OF PROFIT is ihe ratio of the amount of profits it makes, say in a year, to the money-value of its assets at the beginning of that year. The average rate of profit of the whole economy is the ratio of total profit to total capital.The rate of profit would tend to fall if over time the amount of the total capital tended to increase at a faster rate than the total amount of profits.

This fall tends to happen as a result of the increasing amount of old wealth that must be used as fixed equipment in producing new wealth (or, what amounts to more or less the same thing, to the increasing size of the means of production in relation to the amount of human labour needed to operate them). Because there are so many offsetting factors, this tendency for the average rate of profit to fall only becomes evident in the very long run and so could not explain the onset of a much shorter term occurrence like a slump.

In an exchange economy control over the use of the means of production is scattered among thousands of profit-seeking enterprises with no central co-ordination of decisions about the amount and the kind of wealth to be produced. Anarchy inevitably prevails.

For a group of enterprises to make profits, its total productive capacity and output have to be restricted to the level at which the interaction of supply and demand will give a price high enough to cover both the cost of production and a margin for the average rate of profit. The chaotic way in which decisions about production are made means that it is sometimes difficult to restrict productive capacity and output to this level.

According to the BBC today, Solzhenitsyn “opened the eyes of the world to the evils of Soviet Communism”. No, try again. “He exposed the brutality of the Stalin era.” Much better. By way of contrast, the Socialist Party has held the same, consistent and correct attitude towards Russia since before Aleksander Solzhenitsyn was born!

Searching our website, you could be forgiven for thinking that we have had nothing to say about this world famous author. This is not the case as at present only a only a fraction of our published material going back to our inception in 1904 is available online. The Socialist Standard of January 1972, for example, has a piece titled ‘From a Russian prison camp’:

To stick to the word’s original meaning only work which plays a direct part in producing wealth can be described as “productive”. Any other work would be “non-productive”. This is not to make a judgement as to its usefulness, but merely to record the fact that it does not result in any wealth being produced.

The productive non-productive distinction is not the same as that often made between manual and non-manual work. (The latter is an unreal distinction anyway, since all human work involves a person using both brain and hands). A craflsman working on his own must himself do all the work connected with production, planning and organising his work as well as fashioning the raw materials. In the modern workplace these productive tasks are divided among specialist workers, some of whom may wear white collars, work in offices and never see or handle the raw materials. This work — planning, organising, and design — is just as much productive as that done at the coal face or the factory bench. Similarly, an architect’s office is as much a productive workplace as an engineering factory. The distinction here is between productive and non-productive work rather than between productive and non-productive workers, since in practice many jobs involve both kinds of work.

The law of profits says that each enterprise strives to make the maximum amount of profits, and that each state strives to have the maximum amount of profits made by enterprises operating within its frontiers.

An enterprise can only be said to “make” profits in the sense of acquiring through exchange more money than it originally had. The real origin of profits, however, lies elsewhere. As profits are the monetary expression of the surplus wealth produced over and above that consumed by the class of wage earners, they are produced in the first instance by human being applying energy to change nature. So the total amount of profits that can be made by all enterprises is limited by the total amount of this surplus wealth that has been produced. In fact the most convenient ways of understanding profits is to see all the surplus wealth produced as first converted into money and then pooled: and to see all enterprises competing with each other to draw from this pool the largest amount of profits they can. If this competition between enterprises were completely unrestricted then each enterprise would tend to make the same rate of profit: the amount of profits made by each enterprise would in other words, be directly related to the size of its capital. Price would then equal cost of production plus a margin equal to the average rate of profit.

The reason the natural and industrial resources of the world are not used to provide the abundance they are capable of producing is to be sought, not in the realm of technology, but in that of economics.

Economics is basically the study of what happens when wealth is exchanged — that is when it is either bartered for other wealth or bought and sold for money. It is not the study of the production and allocation of wealth as such, but the study of its exchange and how this affects decisions about production and allocation.Exchange is not to be confused with allocation.

For those ‘green consumers’ who have adopted the principles of a green lifestyle eco-tourism fits neatly with the now familiar slogan to ‘Think Globally – Act Locally’ as a counter to environmental destruction. The adoption of a green lifestyle can include: Buying only organic food; keeping a record of your carbon footprint; using bio-degradable products; ensuring your savings and pension fund is ‘ethically’ invested in bio-diversity products or sustainable projects; supporting ‘fair trading’; participating in recycling schemes; be sparing on the use of plastic bags; and even endorsing the Body Shop empire. The solution is presented as an individual act rather than the collective action of individuals struggling for social change to put a stop to environmental destruction. Of course you can do all of these, but you shouldn’t think that such activities will necessarily lessen the impact on the environment.

For instance, despite the claims of the eco-tourism operators that their priority is sustainability and biodiversity, the green consumer lifestyle facilitates the opening up of a new market where environmental concern is transformed into a commodity. When the market is presented as the saviour of the environment then green consumers, and eco-tourists in particular, need to be aware that they cannot disregard the logic of production for profit. Nevertheless, for socialists the idea of adopting a green lifestyle is not to be derided, because – despite these shortcomings - it is a tentative step towards working with nature, rather than against it.

Norilsk has a population of 200,000. no trees grow there. In 1930, there was nothing there, except a few reindeers and reindeer-hunters, but shortly after, nickel and other metal deposits were discovered. In 1935, construction of what was to be the city of Norilsk and the Metallurgical Combine began. Hundreds of thousands of kulak farmers and peasants were rounded up and sent there to toil and, in many cases, die in what was called the Frozen Hell. Just how many was not known. In 1953, following the death of Stalin, as elsewhere in many Siberian labour camps, the slaves of Norilsk rebelled and went on a two-month strike. By 1956, the rapid industrialisation of the Soviet Union, and the need for a more sophisticated workforce of ‘free’ wage-slaves, necessitated the beginning of the end of the Gulag system.

Following the collapse of the Soviet Union, the Norilsk Metallurgical Combine, like many other former Soviet combines and trusts, was privatised, having been purchased ‘for a song’ by Vladimir Fotanin and his business partner, George Soros.

Advocates of reform often make the mistake of reducing capitalism to a logical structure rather than seeing it “holistically” — as a dynamic process. Even as they note its continued evolution, when they talk about changing it, their interest tends to focus on parts and wholes, on mechanical interactions. Hence, they usually assume it will be a massive job from the standpoint of some mythical observer.

That it might conceivably be more of a chain reaction having “emergent properties,” where individuals and groups all begin to adopt a massively coherent response at around the same time (without warning or even having a clear picture) analogous to, say, a flock of birds leaping suddenly into flight — is perhaps not so intuitively obvious. Yet it was to just such a torrential outpouring of public opinion that the rigid Leninist bureaucracies of the former Soviet system fell.