[ALB]

A Keynesian at Occupy Wall Street before they were cleared from Zuccotti Park.Keynesians aren’t the only people asking for capitalist governments to try to spend the way out of the crisis. The Trotskyists and other vanguardists are for this too, though they express this in pre-Keynes terms by demanding Public Works. Unfortunately they call themselves Marxists even though Marx specifically said that this wouldn’t work and in any event was not interested in devising policies to run capitalism.As an example of the tactics of such groups look at this thread on another forum and the request to push the same form of wording at other Occupy sites in accordance with the well-known vanguardist tactic of proposing “model resolutions”.

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In the 1940s and right up until 1950 the Socialist Standard carried on the front page “Registered for transmission to Canada and Newfoundland”. Maybe we still are, but since the “printed paper” rate for postage within the UK was abolished a few years ago now, there is no advantage in any newspaper being registered. And the Post Office no longer delivers mail. Still, the old bye-law might still be in operation. We will see what happens today from 12 noon on.

[ALB]

The government has calculated that the strike will cost “the economy” £500 million. That will be the value of what would have been produced if there wasn’t a strike. Nice to see the government recognise for once that it is workers who are the real wealth producers. Not so nice but predictable that they have also chosen to play the anti “illegal immigrant” card.

[ALB]

The idea that banks can create money/credit out of thin air and then charge interest on it is more widespread than ever, eg Zeitgeist, the Occupiers but not just them. Here, then, are a couple of counter-quotes to theirs.The first is from Paul Samuelson whose textbook Economics has been and still is widely used all over the world:

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Most people have heard that in some mysterious manner banks can create money out of thin air, but few really understand how the process works.Actually, there is nothing magical or incomprehensible about the creation of bank deposits. At every step of the way, one can follow what is happening to the banks’ accounts. The true explanation of deposit creation is simple. What is hard to grasp are the false explanations that still circulate.According to these false explanations, the managers of an ordinary bank are able, by some use of their fountain pens, to lend several dollars for each dollar deposited with them. No wonder practical bankers see red when such power is attributed to them. They only wish they could do so. As every banker knows, he cannot invest money that he does not have; and money that he invests in buying a security or making a loan soon leaves his bank. (chapter 16, 5th edition, 1961)

The second is from Keynes:

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The notion that the creation of credit by the banking system allows investment to take place to which ‘no genuine saving’ corresponds can only be the result of isolating one of the consequences of the increased bank-credit to the exclusion of the others.(…) it is impossible that the intention of the entrepreneur who has borrowed in order to increase investment can become effective (except in substitution for investment by other entrepreneurs which would have occurred otherwise) at a faster rate than the public decide to increase their savings. (General Theory of Employment, Interest and Money, Chapter 7, section V)

 

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Two members of West London branch attended the pre-strike rally in Kingston last night along with about 30 others. In view of the number of unions involved there is going to be a one-day public sector general strike next Wednesday.The official TUC position, as set out in one of the leaflets at the meeting, is:

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It’s wrong to make public sector workers pay an unfair contribution to reducing a deficit they did nothing to cause. Unions want proper negotiations. We have done fair deals before. That is why the TUC has called a day of action for pensions justice on 30 November. It’s a chance to stand up for decent pensions and tell ministers to start negotiating.

In other words, A Fair Pension for a Life’s Fair Work. Of course Socialists who will be affected by the brutal changes will be on strike too, even if we wouldn’t employ the language of justice and fairness, but rather that of class struggle over the division of material wealth.The mood of the meeting was rather different. Most there felt, rightly, that trade union action needed to be supplemented by political action, but saw this as reformist political action (some even defended the Labour Party) to impose an alternative economy policy. A PCSU pamphlet on this merely advocated a return to Keynesian policies (to try to spend a way out of the crisis) which have failed in the past.Even so, the strike will hopefully be a signal for a revival of the defensive class consciousness that trade union consciousness represents; which will make it easier for us to urge the next step: political class consciousness to win political control to end capitalism and bring in socialism as the common ownership and democratic control of the means of production, with production for use not for the market or profit and distribution on the principle “from each their ability, to each their needs” not according to ability to pay.

[ALB]

ALB wrote:

that New Economics Foundation video starts with a quote for Sir Reginald McKenna, dating from 1924, when he was chairman of Midland Bank (now HSBC) though it gives the impression that it dates from 1915-6 when he was Chancellor of the Exchequer, which is all over the internet on Monetary Reform sites including US ones.

I have now checked the quote with how the Times of the time (26 January 1924) reported what he said. The passage in question is :

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I am afraid the ordinary citizen will not like to be told that the banks can, and do, create and destroy money. The amount of finance in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is effected. Every loan, overdraft, or bank purchase creates a deposit, and every repayment of a loan, overdraft, or bank sale destroys a deposit.

This passage is not in the Times report (maybe it was left out, as is possible) but this is:

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While banks have this power of creating money it will be found that they exercise it only within the strict limits of sound banking policy. Anyone who studies the monthly statements of the London Clearing Banks will find that these banks keep a reserve of cash fairly constant in relation to their deposits. If banks increased their loans and investments the result would be to increase the aggregrate amount of their deposits, but to add nothing to their cash resources. The proportion of cash to deposits would be reduced, and, in the judgement of those responsible for the management of the banks, would be less than sound banking principles dictated. Thus a limit is placed on a bank’s power of lending by the amount of its cash and, so long as the canons of conservative banking are conformed to, additional loans can only be made if this cash is increased. Banks lend or invest up to the full amount by their cash resources, but they do not go beyond that point.

Which gives a rather different interpretation as to what he meant than has been suggested.Another dodgy quote from the currency cranks hits the dust. 

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A couple of posters from the colonnade at St Paul’s yesterday:One for us to adopt, I think?There really is a Wall Street in London, in Islington.There were ten of us yesterday, including two contacts. Which meant that we had more discussions, ran out of leaflets and disposed of more Socialist Standards and pamphlets.One troubling thing was a City of London policeman going around making notes about all the stalls. Apparently the police are thinking of cracking down on “hawkers”, probably as part of a plan of petty harrassment of the Occupation. Police have tried this on us in the past to try to stop us selling the Socialist Standard in the streets. There were in fact hawkers there selling souvenir posters and badges of the Occupation and there is a possibility that the Occupiers (who are pursuing the intelligent policy of strictly following the law so as not to give the authorities any excuse to intervene) might go along with banning them. Hopefully this will only be a remote possibility as for them to agree to others who have set up stalls without permission being moved on would be the height of irony (or would it be hypocrisy?).Anyway we are not hawkers. We are just there to discuss and hand out leaflets and other publications.

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I don’t want to give the wrong impression. He began and ended with a call for political action to “end Thatcherism” (probably because he was speaking in Britain). In between he did say that there should be a global movement to try to stop capital accumulation and did instance movements by illegal workers in the US and by indigenous peoples in Bolivia and India as examples of this, but he didn’t outline any alternative to capitalism except to mention once the need for a “zero-growth, non-capitalist” economy without going into any more detail.I think this brings out the difference between “anti-capitalist” and “anti-capitalism”. I’m sure he is anti-capitalism but what he was advocating was resistance to the activities of capitalists within capitalism.It’s a pity you can’t see the video to judge for yourself.

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Just watched it. A bit disappointing considering some of the things he has written. Although he identifies the 1 percent global elite as “the capitalist class” and calls them that by name, the main point he seems to be making is the need for a mass political movement not to end capitalism, but only to reverse and end Thatcherism and restore the situation that existed before her. He looks a bit like the Archbishop of Canterbury and in this respect sounds like him. Not a bad outdoor speaker though.

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These seems arty-farty rather than socialist.

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Just finished reading the book of that New Economics Foundation video. Here are some of its more ridiculous claims:

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private banks can really create money by simply making an entry in a ledger.

and not just money but real wealth too:

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Those with the power to create new money have enormous power — they can create wealth simply by typing figures into a computer.

But it’s not just banks:

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Building societies and credit unions also have the right to create money through issuing credit.

Tell that to the management committee of a credit union.But not only that. Banks (and presumably credit unions too) create money and wealth not just when they make a loan but whenever they spend any money even to cover their own expenses, including on the salaries of their staff:

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the bank creates new money when it buys assets, goods or services on its own account, or pays its staff salaries or bonuses.

They can even create their own capital (though why they need any when they can create money simply by making an entry in a ledger and then spending it is unclear):

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in aggregate, banks are not constrained by capital, as they create the money that circulates and can be used to increase capital.

With banks’ possessing such magical powers it’s surprising that any capitalists invest in the non-banking sector.  And why don’t we all set up credit unions and pay ourselves the money we need instead of going to work for an employer?And there’s this:

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It is the ability of banks to create new money, independently of the state, which gave rise to capitalism.

Marx tells a rather different story in the section of Capital on “So-called Primitive Accumulation”. Earlier of course he had explained that the only way wealth can be produced is by humans applying their mental and physical energies to materials that originally came from nature.

[ALB]

I agree. His book on Capital is good. I think he’s ex-Communist Party. Some people who consider themselves Marxists are in fact leftwing Keynesians. Maybe some of the authors of the Political Economy of Development fall into this category.

[ALB]

ciro wrote:

from you link and text, I understand that Marx like us wanted direct democracy. But: what about our idea that we should take power with elections where this is possible, and the underlying idea that to establish socialism we need that a vast majority of people wants this? Are those idea also in Marx?

Yes, Marx did argue that under certain conditions (control of the government by an elected parliament) a socialist-minded working class would be able to gain control of political power peaceably via elections. As he said in a speech in The Hague in Holland in 1872:

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You know that the institutions, mores, and traditions of various countries must be taken into consideration, and we do not deny that there are countries — such as America, England, and if I were more familiar with your institutions, I would perhaps also add Holland — where the workers can attain their goal by peaceful means. This being the case, we must also recognize the fact that in most countries on the Continent the lever of our revolution must be force; it is force to which we must some day appeal in order to erect the rule of labour.

It is a measure of the extent of Leninist and insurrectionary ideas in Italy that it is not easy to find an Italian version of this on the internet, but this might work.At the end of  the more readily available Preface that Engels wrote to the English translation of Capital that came out in 1886 Engels confirmed this when he wrote that

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the voice ought to be heard of a man whose whole theory is the result of a lifelong study of the economic history and condition of England, and whom that study led to the conclusion that, at least in Europe, England is the only country where the inevitable social revolution might be effected entirely by peaceful and legal means. He certainly never forgot to add that he hardly expected the English ruling classes to submit, without a “pro-slavery rebellion,” to this peaceful and legal revolution

This is more easily available in Italian and can be found here.Having said this, our position does not rest on what Marx said (we don’t slavishly accept him as an infallible authority) but on our own analysis of the facts which in our view confirm Marx’s point of view.Lenin argued that since 1872 conditions in England and America had become more like what they were in Europe in 1872 (where Marx saw insurrection as the only way) and so a peaceful winning of political power had become impossible in England and America too. We argue that, on the contrary, today conditions in Europe and many other parts of the world have become more like conditions in England and America in 1872 and so a peaceful revolution is possible in them too.

[ALB]

Doesn’t Nicolai Bukharin deal with this, from a Marxian perspective, in his Economic Theory of the Leisure Class.  As it was written in 1914 it is free from Bolshevik apologetics. Bukharin, in fact, was probably the best (least worst) of the Bolshevik writers on Marx.

[ALB]

A pro-capitalist rejoices.

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