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DJP wrote:

With regards to Marx and ‘the labour theory of value’. I’m beginning to suspect that this was first used by the neo-classical economists so that they could lump Marx, Ricardo and Smith together then attempt to trash Marx by critiquing Ricardo.

I think it is more likely that it was first used by Socialists to explain the exploitation of the working class. Although Marx’s theory of value is different from that of Adam Smith and Ricardo (I don’t think they used the term “labour theory of value” either), it clearly is a theory of value based on labour. So, to talk of Marx’s labour theory of value doesn’t seem out of place.

DJP wrote:

Just to be clear I’m not saying that Marx did not have a theory of value, but when it is (mis)understood as a theory of the prices of individual commodities (i.e price=value) it doesn’t add up properly.

I agree that Marx’s theory of value was not a theory of price (as were Smith’s and Ricardo’s), as misunderstood by some of his supporters as well as by his opponents.

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Socialist Party Head Office wrote:

Among other things Lanchester claims that Marx never used the word “capitalism”:

I’m not sure how significant this is. After all, language like everything else changes, but I suppose it could tell us what Marx would have meant by the word had he used it rather than the term he did use, i.e. the capitalist mode of production. In other words, capitalism is a way of producing things, based, as he explained, on the production of commodities by wage-labour.

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There were 30 or so people present at the meeting including 9 members. The CPGB people argued that the real Lenin wasn’t the Lenin of What Is To Be Done nor the post-1917 Lenin (when he advocated a top-down party of professional revolutionaries to lead the working class) but the Lenin of 1905-1914 who was a leftwing Social Democrat whose hero was Kautsky and whose model was the German Social Democratic Party (a bit like Martov in fact, though they didn’t draw this conclusion!). We didn’t buy that one. Nor do most others calling themselves “Leninists” (as they do).We also discovered that they don’t think that Russia was capitalist (at least not after 1929), though it wasn’t clear what they did think it was. A return meeting might take place at which we can explain that commodity-production and wage-labour were never at any time abolished in Russia and that Lenin himself pointed out that capitalism under state control was the only possible economic course for Russia (as Martov had said all along).The meeting was recorded and presumably will be made available in due course for anyone to listen to.

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I suppose your ideal system could work, but it assumes two things:1. Even if a bank does make a loan without having the money to cover it, it is expecting to get this by the end of the day. But this money would be coming out of payments due to it from other banks. So the loan would be being backed by funds the bank had (or got the same day).2. That, when it comes to settlements between banks at the end of the day, no bank finds itself in the red (surely this is highly unlikely except as an accident). So unlikely in fact that this is why the Bank of England is involved as a backstop in this process supplying any missing liquidity, as explained here on the Bank of England’s website:http://www.bankofengland.co.uk/markets/Pages/paymentsystems/default.aspxInsofar as any money is being created “out of nothing” it is being done by the Bank of England not the commercial bank.

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But, in your example, the banks are not creating loans “out of nothing” but out of deposits (real deposits by people with money, not “deposits” they open for borrowers). The process can only keep going if deposits do. (And every loan does not create a deposit: money loaned by one bank may find its way into another bank, but there’s no guarantee that all of it will).By co-incidence I’ve been having a e-mail exchange with someone who puts a far more subtle theory of banks creating money “out of nothing” which does have something in common with your scenario. Not the one we were entertained to at the meeting with Zeitgeist which claims that a single bank can create money to lend by a mere stroke of the pen, but one involving the whole banking system including the Bank of England. This is how he put it:

Quote:

When the commercial bank makes an advance, it simultaneously creates a deposit: i.e.money is put in the borrower’s account. That deposit is then used by the recipient of the advance to buy things: it is money. Of course, when the recipient of the advance uses it to buy things from a customer of another bank, the bank that created the advance has to settle with the other bank by using with a claim on the central bank – that is how banks settle with one another. So it must either borrow from the central bank or own reserves at the bank (at present, the banks own vast reserves at the central bank, because of QE. But that’s not usual). Provided the commercial bank is deemed solvent (and often even when it is not), the central bank will always lend it the needed central bank money, at its official rate. So the central bank will provide the needed backing to the money created by the commercial bank. In this way, the money supply grows and normally net transfers of reserves between banks are very small, though that changes of course with a run on one of them.Now suppose the central bank thinks the money supply is growing too fast, then it will raise its interest rate. That will then become the rate charged by the bank on its loans (it doesn’t want to charge less than it pays the central bank on money it needs to borrow). That will reduce the number of willing borrowers from the bank and the growth of the money supply will slow.The answer then is that commercial banks can create money out of nothing, because the central bank will always lend a solvent bank the CB money it needs to convert its liabilities into CB money, at par. The commercial bank tail wags the CB dog, so to speak. They do not act on their own. They act in conjunction with the CB.Thus, all money in a fiat money system is created out of nothing. Nothing backs it. It is the joint product of the commercial banks and the central bank, acting together.

Since nobody (not even us) denies that a central bank can create money “out of nothing” (that’s what “fiat money” is) this theory is not necessarily based on a silly fallacy. It does not claim that a single bank on its own can create money out of nothing. What it is saying is that a bank (in the system) can risk making a loan without first having the money because it knows that at the end of the day (literally, when balances between banks are cleared) it can get the money from the central bank. And of course it’s the central bank that’s doing the creating of any money out of nothing. Also, the commercial banks’ loans are in fact covered by something (a loan from the central bank).This said, this model is challenged by other economists, notably Paul Krugman who deny that this is the way the banking system works and that the commercial bank tail does or could wag the central bank dog. This is an argument about the best way to control banking lending (via interest rates or via central bank controls) which, as socialists, we needn’t get into. Personally, I’m inclined to agree that there are limits to the system working in the way described above.The other objection to this theory is the language in which it is expressed. By talking about “banks” being able to create money out of nothing this allows the real banking cranks to use this in support of their nonsensical theory that a single bank can do this on its own.

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Socialist Party Head Office wrote:

Reply received from David Graeber:Dear editors:A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce – that is, from the exploitation of wage laborers. Where does that profit really come from? It would be very interesting to know what percent of the average (say) American’s income is now directly expropriated by the FIRE [Finance, Insurance, Real Estate] sector, compared to what might be said to be extracted indirectly, through the wage.

The whole letter with a reply from the editors will be published in the October Socialist Standard, but this is by far the weakest part of what he has to be say. He seems to be suggesting that the profits of the financial sector might come from interest payments by workers on mortgages and other loans. This sounds a bit like the “secondary exploitation” discussed in another thread here (the one on Untermann), only he seems to think that it is primary. Otherwise why does he say that exploitation through working for wages is “indirect”? No wonder he is so popular in currency crank circles and others who think that the banks are the main villains of the piece.I would have thought that the source of all profit is obvious: the surplus value produced by workers in the productive sector of the economy. This includes the profits of the financial sector. How could it be otherwise when wealth can only be produced by work transforming materials that originally came from nature into something useful and the whole financial sector doesn’t produce a single item of wealth?

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jondwhite wrote:

Was Lenin influenced by Nechayev?

I don’t think so, but he was influenced by the same wing of the general non-Marxist anti-Tsarist revolutionary movement, i.e. those who favoured anti-Tsarist revolutionaries organising as an elite and highly-disciplined vanguard of professional revolutionaries. This is pointed out at the end of this review from the July 1970 Socialist Standard of Lenin’s notorious un-Marxist work What Is To Be Done?That reminds me: 80 or so  articles from the 1970s have now been added to the Archives section on this site.

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Just listened to this programme on peer-to-peer lending on BBC Radio 4. It can be heard again here and on the radio tomorrow at 9pm and next Wednesday at 3pm.It’s about cutting out banks as intermediaries and people lending directly to borrowers. No nonsense in the programme about banks being able to lend without having the money themselves. It seems that in fact you can get a better rate here as both a lender and a borrower than banks offer. But this wouldn’t be the case if banks could create money to lend out of thin air while peer-to-peer websites and call centres have to pay interest to lenders.

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SocialistPunk wrote:

Hello to everyone, just joined.I’ve been watching this forum on and off for a few months and thought, why not get in there.I used to be a member of the SPGB North East branch going back a few years.

Welcome. This is a coincidence. I don’t know if you are still in the North East but there is still a branch their with 16 members on the books. But it can’t be said to be thriving. And at the moment we are trying to revive it on the basis of the new model we have adopted of a regional branch (meeting in a regional centre on the Saturday or Sunday during the day rather than in a town on a weekday evening). This has worked in other parts of the country.  We need all the help anyone can offer to get something going again in the North East where we’ve put in a lot of work over the years contesting Westminster, European and local elections.

SocialistPunk wrote:

I agree that the party approach needs updating, and that far too much time is devoted to fruitless argument with left wing groups.

I’m not sure we do as much of that as we did at one time. But it’s still true that most of those who have joined for the first time in recent years have still come from the “left” (Labour, Communist, Militant) though a couple have come from the Liberals and even one from UKIP (don’t know what that means).

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It’s now on the Socialist Standard Archives section here (along with other new stuff from the 1970s):http://www.worldsocialism.org/spgb/socialist-standard/1970s/1971/no-807-november-1971/right-be-lazy

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We beat them to it, by 40 years ! Here’s the editorial from the November 1971 Socialist Standard, also handed out as a leaflet at the TUC in Brighton in September 1972:

Quote:

The Right to be LazyIn the course of the French revolution of 1848 the workers of Paris  went into the streets to demand “The Right to Work”.  Ever since, whenever unemployment has grown, trade unionists have demanded the same “right”. In fact the Clydeside shipworkers are supposed to be asserting it at this very momentBut what is this high-sounding Right to Work? To the average trade unionist it is probably the “right” to have a job and the pay packet that goes with it. It would, in other words, be more accurately called “The Right to Employment” or “The Right to Work for Wages”It should not be necessary to argue that under capitalism no such right exists, nor could it. Capitalism is based on the ownership of means of production by a minority.  The rest have no alternative but to sell their ability to work — when they can — to one or other of these  employers.  But the employers are not philanthropists. They do not employ people in order to give these employees a living. They  only employ people when they have calculated that they themselves can make a profit from selling the goods the workers produce.Production, and therefore employment, is determined under capitalism by the profit motive. The rule “no profit, no production” is the guiding economic principle. If those who own the means of production calculate — as many have done recently — that they cannot make a profit by selling the goods their factories could turn out, then they will run those factories below full capacity or even close them down altogether. The result is the mounting redundancies and growing unemployment we are now experiencing.This is the normal way capitalism works and is one reason why the Right to Work is a completely unrealistic demand. It amounts to demanding that employers abandon the profit motive and operate their system on some other principle. But they could not do this even if they wanted to, since what they can do is limited by the working of capitalism’s market forces. Nor could they be forced to do it even by the most militant trade union or political action. If pressed too far, they would merely shut up shop. The stark fact is that capitalism creates, and needs to create, rising unemployment from time to time.So, our average trade unionist may now be thinking, are you saying that in order to get the Right to Work we must get rid of capitalism and establish Socialism? No, we are not! We are not in favour of the Right to Work in the first place. Remember the Right to Work is merely a fancy way of referring to the Right of Employment, the Right to Work for Wages. In our view, this is demanding the Right To Be Exploited. It involves accepting capitalism and its wages system. The employer/employee relationship is based on exploitation since, if the employer is to make a profit, the wages he pays his employees must be less than the value of what they produce. The system of employment for wages shows that human brain and muscle power has become a mere commodity, to be bought and sold like some object. It signifies that those who actually produce the wealth of society are excluded from ownership and control of the means of production and so have no choice but to operate them for the employers on the employers’ terms — and at the employers’ convenience. The wage packet is in fact a badge of slavery.No, Socialists don’t want the Right to Work. It would be more accurate to say that we want its opposite, the Right To Be Lazy. This isn’t as way-out as might seem. Just think of developments in technology over the past hundred or so years, developments which are still going on, and you will see that the bulk of the hard grind of production is now done, and could be done even more, by machines. Automation could now relieve human beings of the burden of boring toil. Nobody need do a job he doesn’t like doing. The set working day could be reduced to two or three hours, freeing men to engage in the activities of their choice, including even producing useful things.Of course, this will never happen as long as the means of production are the property of a minority. It could only happen in a society where the factories, farms and other places where wealth is produced are commonly owned by all the people. There would then be no employers, nor wage-earners. Instead everybody would be an equal member of a free community organised to produce an abundance of good-quality consumer goods for people to take freely according to their needs.Actually, so long as it is enjoyable, work is a natural human activity, not to say need. In this sense to talk of the Right To Be Lazy can be misleading. But although men will always work, there is no reason for it take the form of boring toil. It could and should be interesting and so become like some of today’s leisure-time activities — done for the fun of it.To convert work from boring toil to creative activity is now possible. The ethic of hard work — necessary perhaps in the past to build up the means of production to the point where they can now turn out abundance — is outdated, and worse: it helps to keep capitalism going. No five words better sum up the Socialist’s emphatic rejection of the dogma that boring toil must be the lot of mankind than the slogan “The Right To Be Lazy”. Speed the day when trade unionists begin to demonstrate for this rather than some spurious Right to Work.

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Just came across this, from our website here, while looking for something else:http://www.worldsocialism.org/spgb/education/depth-articles/society-and-culture/imagine-john-lennonI see it’s also on the World Socialist Movement site:http://www.worldsocialism.org/articles/imagine_by_john_lennon.phpDoes that make it “the Party Case”? !

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Interesting one. Our “official” position is that the left/right political division is false and that therefore the words ‘leftwing’ and ‘rightwing’ only serve to give it credibility. So we don’t use them — in theory. In practice, however, we do, ironically because they are in general use and we’re just following how other people use them to make ourselves understood on their terms. It’s the same with the term “middle class”. We say it doesn’t exist but we still use it, at least in conversation.

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DJP wrote:

I suggest you contact the general secretary to get your email address added to the list.

He was only appointed less than 2 weeks ago at the Skype EC meeting of 4 August! In view of the super-efficiency of the Assistant Secretary I imagine he’s already been added to the list.

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TheOldGreyWhistle wrote:

So why cant you find an excuse for Lennon’ support for the IRA?

Actually, the article, after setting out Marx’s defence of his position, ends up saying we still think he was wrong:

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But whatever Marx and Engels supported, we in the Socialist Party of Great Britain and the World Socialist Party of Ireland do not agree that Socialists should support, or should have supported, Irish Nationalism any more than they should support nationalism anywhere else.

Basically, I’m on your side. I don’t think that the fact that Lennon supported the IRA detracts from the socialist sentiments expressed in “Imagine” or should stop us using it to spread socialist ideas.

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