Marx turns, now, to this question of what is value? What is the value of a commodity, and how is it determined? In discussing value, here, he makes clear that he is referring to its exchange-value, as against its use value. But, to determine the exchange value of a commodity, it is necessary to first understand an earlier form of value, because exchange-value is itself only a relative form of value, the value of one commodity, as measured by a quantity of some other commodity. If this proportional relation between them is not to be purely arbitrary, it must have some rational, objective basis. The two commodities must have some commonality that enables them to be compared. That commonality is their value, the amount of universal labour required for their reproduction.
As Marx describes, in Capital, Theories of Surplus Value, and elsewhere, this value arises, even before commodity production and exchange. Before commodities, there are products, i.e. use-values created by labour, not for sale or exchange, but for direct consumption by the producers. This value is not referred to as such, and, rather, etymologically, at this time, the word value or worth, means use-value. Nevertheless, as Marx sets out in his Letter To Kugelmann, and as Engels had written as early as 1844, The Law of Value imposes itself, because, with a limited amount of labour-time/value at their disposal, producers must balance the useful effects in terms of use-values produced (demand), as against the labour-time/value required for their production (supply). Or, as stated earlier, it is value/labour-time that determines supply, and only on the basis of that that demand can determine its allocation.
The value of products is necessarily individual value, because it is comprised of the actual concrete labour used in production. But, as Marx and Engels describe, as these products begin to be exchanged between different communities, as part of ceremonies and rituals, so trade begins to develop, and these products begin to be produced for the specific purpose of being exchanged. They become commodities.
But, of course, looking only from the present day perspective, where society is based upon commodity production and exchange, then, superficially, it appears that value itself, is only this relative value, this proportional relation between commodities, or, more specifically, the relation between those commodities and the general commodity – money. This is the basis of commodity fetishism. Just as the existence of money as currency led to the confusion between the two, which could only be resolved by examining the evolution of money out of commodity exchange, so too with value and exchange value.
“Taking one single commodity, wheat, for instance, we shall find that a quarter of wheat exchanges in almost countless variations of proportion with different commodities. Yet, its value remaining always the same, whether expressed in silk, gold, or any other commodity, it must be something distinct from, and independent of, these different rates of exchange with different articles. It must be possible to express, in a very different form, these various equations with various commodities.” (p 41-2)
Marx, himself, causes some confusion by his formulation. Earlier, he had said,
“... in speaking of value I speak always of exchangeable value” (p 39)
But, what he meant, here, was to distinguish between exchange-value as against use-value. Otherwise, his statement about “its value remaining always the same”, whilst its exchange-value against other commodities having “countless variations”, would be a contradiction. It would be saying that whilst the exchange-value of wheat remained constant, it had countless variations, i.e. was not constant. What remains constant is its value, i.e. the universal labour required for its production, whereas what has countless variations is the proportional relation of this value to the value of other commodities, i.e. its exchange-value.
Blue Labour lied about their economic plans during the election, by deliberately ignoring what everyone paying attention knew, which is that there was a £20 billion black hole in the Tory government's budgets that needed to be addressed, even before Blue Labour's own spending plans were considered. For months, even before the election was announced, I and others wrote about that black hole, and the fact that Blue Labour was deliberately ignoring it, to sell their narrative. I wrote about it further, during the election campaign, and I pointed it out personally, to Labour canvassers during the election, noting that the plans to raise an additional billion or so from removing tax relief on private school fees, certainly was not going to plug it. Yet, here we are with Blue Labour professing, surprise, shock and awe at discovering a £22 billion black hole in the public finances that they claim they knew nothing about! As with the rest of their politics, and political approach, Blue Labour lied, and is continuing to lie.
Let's start by being scrupulously fair to Blue Labour, and note that, in fact, the £22 billion black hole “discovered” by Reeves, and announced to parliament in her speech, is not the same £20 billion black hole that I and others previously discussed. The fact that the two figures are very similar confuses the matter. In the end, I will show that this really doesn't change anything. The £20 billion black hole that I and others, not least the IFS, talked about before and during the election, is a potential, or theoretical black hole in the Tory government's tax and spending plans, as projected into the future. It is a gap between what they are projected to take in in taxes, and what they are projected to spend, based on their commitments for funding welfare, the NHS, Education and so on. It is why, we talked about a black hole, of £20 billion per year. What Reeves and Blue Labour say they have discovered, is a £22 billion black hole in this year's budget, i.e. not a potential or theoretical deficit, but an actual deficit that needs to be addressed.
In this interview, Jonathan Portes, explains that difference.
But, in the end, it makes no difference if I say that there is a theoretical £20 billion black hole in the finances that Blue Labour ignored, in order to present its fantasy pre-election budget plans, which claimed to be able to implement a series of policies, all of which were costed and affordable, without additional spending cuts, tax rises, or borrowing, as against, in the first year, saying that there is an actual, one-off, black hole of £20 billion in the budget. When we get to next year, the theoretical, projected black hole of £20 billion in the books, will, also, unless addressed, or the reality changes, also, become, an actual, real black hole in that year. It may be that the economy grows faster than expected, between now and then, so that tax revenues rise, and welfare spending declines, reducing that £20 billion figure, for next year, but, it may also be that the economy grows slower, tax revenues grow more slowly, and spending rises, causing the black hole to be even bigger.
Indeed, Blue Labour's budget plans were premised on a fanciful bit of magical thinking that growth was suddenly going to increase out of thin air, and yet, their short-termism and the straight-jacket they have imposed on themselves means that, in order to address the “shock” £20 billion black hole in the budget for this year, they have announced cuts in this year's spending, which, by reducing aggregate demand, as against what was included in economic models, for this year, and after, will mean that figures for projected growth will have to be reduced, not raised. In that case, Blue Labour's magical thinking source of funding for its plans – which as I have set out before were pretty meagre and non-aspirational to begin with – has already hit the rocks.
In this video, Richard Murphy, also sets that out, and also discusses why Reeves other statement that we cannot do what we cannot afford, is also a lie, though I will address that point, further.
Let me first address the point about Keynes' statement that “what we can do we can afford”, set up in opposition, to Reeves, obviously chosen phrase, which will be repeated ad nauseam, that “what we cannot afford we cannot do”, which is an extension of Thatcher's family budget homilies, in relation to the finances of the state. Indeed, Reeves gave one such homily herself in a video interview. Is Keynes right, as against Reeves? Yes, and no. Just as some years ago, I noted that Keynes was right as against Hayek, but everything, here, is relative, and requires qualification.
What does Keynes statement mean? It is, in fact, an acknowledgement of the reality of what money is, as against currency, or money tokens/credit. Suppose we have a basic economy with no money, just direct production, as with a peasant household. Does this household require money to do things? Clearly not, because, for millennia, such households continued to function without money, or any concept of money. The only things such a household needs to consider in such an economy are does it have the labour to do the things it wants to do (grow food, hunt, produce clothes etc.) and does it have the raw materials for that labour to work with, to do those things, i.e. seeds, tools and so on, as well as suitable land, and natural resources. This the operation of The Law of Value.
Clearly, what it can do it can afford, because the question of affordability comes down to, simply, does it have the available labour and resources. If it has, particularly, unused and available labour-time, that labour can be utilised, and, thereby, produce more, including, producing more raw materials, and means of production, so that the resources of such a society are, also, thereby enhanced. For such a society, the idea that it could not do additional things, whilst it had unemployed labour and resources, because it somehow could not afford, i.e. did not have “money” to pay for these things, to employ this labour, not only would appear absurd, but would not even enter their mind, in the first place.
As Marx sets out, in Capital I, and elsewhere, the “value” of all this production, is equal to the total social labour-time, required for its production. Such societies do not refer to such “value”, because it does not occur to them to do so, even less to put a price on it, which itself requires the development of money. The only “value”, such societies consider is use-value, i.e. what they want to do for the improvement of their lives, and, in that context, they only set against what they want to to do, the labour-time required to do it. Indeed, as Engels set out, that is the way a future communist society would operate too.
“The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan.”
“As long ago as 1844 I stated that the above-mentioned balancing of useful effects and expenditure of labour on making decisions concerning production was all that would be left, in a communist society, of the politico-economic concept of value. (Deutsch-Französische Jahrbücher, p. 95) The scientific justification for this statement, however, as can be seen, was made possible only by Marx's Capital.”
(Anti-Duhring, Chapter 26)
In A Contribution To The Critique of Political Economy, Capital I, and elsewhere, Marx, then examines the situation, not in relation to this direct production of products, but the production of commodities. If our peasant household produces beans, and another peasant household produces peas, are they constrained in how much they can produce by what they can afford, i.e. what money they have? Of course, not, because we have not yet even had the development of money, let alone any limitation it might impose. The same constraints apply to two separate peasant households that applied to one. In other words, what each can do, they can afford. If they have the available labour-time and resources they can do a range of things they want to do.
But, each separate household, may find that it has advantages in producing one thing rather than another, just as, Marx noted that, within each household, there developed a division of labour, because some members of the household were better at hunting than making pottery and so on. The social division of labour, whereby, some commodities are produced by one group, to be exchanged for other commodities produced by some other group, raises social productivity, and so makes it possible to increase what society can do, and what it can do, in this way, it can still afford to do.
This exchange of commodities does not, even, require, money, to begin with, as Marx sets out in the above cited works. However, it does require some rational basis upon which this exchange of commodities can be undertaken. That rational basis is the value of the commodities themselves, and that value, already inherent within the product, as its individual value, becomes manifest in the commodity, as an aggregate of these individual values, via competition between buyers one with another, as well as between sellers one with another, and between buyers and sellers. The individual labour-time used in the production of each commodity, becomes transformed by this competition, into universal labour, and the aggregate of all these individual values, becomes manifest as an average market value of the commodity.
So, we still have societies, and economies that can function perfectly well, even without money, let alone any question of whether it needs such money to be able to afford to do the things it wants to do. The only question it asks itself is do I have the labour-time, and resources to do this? As Marx explains, money (as distinct from currency/money tokens/credit) arises, as an inextricable part of this commodity production and exchange, and the need to be able to measure the value of commodities on the basis of this universal labour. In other words, although the measurement of value is initially done on the basis of a rough calculation of this universal labour-time for each commodity, as they are exchanged by barter, it soon becomes natural to select one particular commodity, whose value is well-known, and to use it as an indirect measure of the value of every other commodity. As Engels describes, initially, cattle were frequently used for that purpose, and became this money commodity.
So, let's be clear what this money commodity is, i.e. what money is, and what it is not. The money commodity is simply a specific, physical manifestation of money. This money commodity may be cattle, or it may be salt, or it may be gold or silver. What is money? It is the indirect measure of value/labour-time, by means of a quantity of some other commodity, be it cattle, salt, gold or silver. If the value of a head of cattle is 100 hours of labour, and all of the commodities produced in an economy have a value of 100 million hours of labour, we can say that the money value of those commodities is 1 million head of cattle. It, does not require such a society to have 1 million head of cattle, or any cattle at all, because the head of cattle is just a measure of value. Likewise, to return to Reeves' argument, it would make absolutely no sense for such a society to say that it needed money in the form of 1 million head of cattle to be able to afford to produce the commodities with a value of 1 million head of cattle.
So, in this respect, Keynes is right, and Reeves/Hayek/Thatcher et al, are wrong. The constraint on what can be afforded, is not some mystical thing called money, which is merely a means of indirectly measuring value, but is can we do it, do we have the available labour-time, and resources? However, if we move from the abstract to the concrete, and examine the reality of a capitalist economy, its clear that Keynes is also wrong. In a capitalist economy, in which it is the capitalist class that has control of the state, and, thereby, the economy, the question is not simply can we do it, i.e. do we have the unused labour and resources, but is rather, is it profitable to do it? In fact, as I have set out in numerous other posts, in a world in which the ruling class is no longer comprised of private industrial capitalists (large-scale socialised capital is, in fact, now, the collective property of workers), but of money-lending capitalists (owners of fictitious-capital), the question is not even whether it is profitable to do it, but is, will doing it cause interest rates to rise, and so asset prices to crash? Unless that is understood, its impossible to understand the motivations behind the actions of states and governments.
Reeves' statement that if we can't afford it we can't do it, is a lie. Even in terms of the household budget homily, its a lie. Most families, for example, can't afford to buy a house. That doesn't stop them buying a house, because they take out a mortgage, i.e. borrow the money to do so. For many, the same is true of a car, and having bought a car, it might, for example, make possible obtaining employment, and so income that otherwise would not have been possible. Businesses do that all the time, borrowing money to buy means of production and labour-power that creates new value, and surplus value that not only increases real wealth (new use values), but also the money to be able to buy those commodities, and accumulate additional capital.
But, it is a lie, because, even in terms of this absurd concept that it is money (by which she really means currency), rather than available labour-time and resources, that is the constraint, the amount of money the government has to spend, even setting aside the potential for borrowing, is not fixed! She could have simply announced additional taxes. The argument she has given for not doing that is flimsy. It is that Blue Labour made a commitment not to do so, and is sticking to its commitment, despite the fact that she, now, says that the reality is different to what they thought it was. That is as ridiculous as their argument that nearly ten years ago, the referendum decided on a disastrous Brexit, and, although the clear majority, now, want to reverse it, Blue Labour is committed to sticking with the original decision!!!
Moreover, although they set out that they would not raise a range of taxes such as Income Tax and VAT, they said nothing about other taxes, such as, for example, the introduction of a Wealth Tax. According to Oxfam, based on figures from Credit Suisse, the wealthiest 1% of Britons comprises 685,000 people, with a total wealth of £2.8 trillion. To cover, the £20 billion black hole, would require a wealth tax on the top 1% of just 0.75%. A 1% wealth tax would bring in £28 billion a year. In fact, as I've set out before, even this top 1% is not representative of the really rich, who comprise the ruling class. To get into it, you only need wealth of just over £2 million, which, given, the inflation of house prices, in parts of the country, in particular, means that lots of people are dragged into it, whose wealth is tied up in the house they live in, as this report from the Resolution Foundation, indicated. A 1% wealth tax, on those at the bottom of that top 1%, would mean, for them, a tax bill of over £20,000, which would not be practical given that their wealth is tied up in their house, and things like a personal pension fund.
By contrast, the wealthiest four people had total wealth of £51 billion. Even ignoring this skew, whereby wealth is even more concentrated in the hands of the top 0.1%, and even more in the top 0.01%, comprising 68.5 thousand, and 6.85 thousand people respectively, a uniform distribution of wealth within the top 1% would give wealth of £280 billion for the top 0.1%. In other words, a wealth tax of 10%, on just that top 0.1% would produce £28 billion a year. More than enough to plug the black hole. Yet, Reeves, and the media, never consider such an option. When they talk about tax, it is always only in terms of taxes on income, not wealth, and it is only on the incomes of workers and the middle-class.
The reason is quite simple. They are not going to challenge the basis of wealth and power of that top 0.1%, that comprise the ruling class. The 68,000 people it comprises, can simply respond, in any case, by moving to some other country, or tax haven, just as business confronted with higher Corporation Tax, can relocate to other countries with lower tax rates. Not only did I and others point out that Blue Labour were lying about the state of the economy, in order to claim that their own figures added up, but, before the election I set out why, given that previously known £20 billion black hole, a Blue Labour government was going to face problems in filling it, and financing its other, albeit meagre, spending plans either from increased taxes, borrowing or spending cuts, particularly given its refusal to re-join the EU.
So, why did Rachel Reeves not know that there was this £20 billion black hole, when I, and others had written and spoke about it for months before the election? Were they not listening, were they incompetent? Whilst I believe that I understand the way that capitalism works better than either Reeves or Hunt, that is not the reason. The reason I and others were aware of this black hole, is that the IFS and others had already provided the figures to prove it, and Paul Johnson and others of the IFS had appeared on TV, many times to say that there was this black hole, that Reeves and Blue Labour were ignoring! Yet, Reeves and others continue to appear on TV and claim that the IFS backs them up.
The media itself, has, of course, also been complicit in letting Blue Labour get away with these lies, just as it does in relation to its position on genocide in Gaza, and the continuing inter-imperialist war between NATO and Russia/China being fought out on the soil of Ukraine.
As Milne, Murray et al constructed their lists, the Right of the PLP, backed by the bourgeois state and media, got on with the job of undermining Corbyn, and organising their coup.
Stalin argued,
“It is clear that whoever calls at present for the immediate creation of soviets of workers’ deputies in this [Wuhan] district, is attempting to jump [!] over the Guomindang phase of the Chinese revolution, and he risks putting the Chinese revolution in a most difficult position.” (p 278)
The same approach was taken by Corbyn's Stalinist advisors, and leaders of Momentum. Don't push for democratisation of the party, or deselection of the Right MP's, because, to do so, puts the leadership and its electoral ambitions in “a difficult position”. Stalin argued that workers' and peasants' soviets should only be established after the completion of the bourgeois-democratic revolution, i.e. totally at odds with Marx's advice, in his 1850 Address, and also with the experience of February 1917, in Russia.
“In this manner, Stalin did not consider it permissible to strengthen the position of the workers and peasants through soviets, so long as the positions of the Wuhan government, of the counter-revolutionary bourgeoisie, were not strengthened.” (p 278)
That, simply, repeated the error of the approach to Chiang Kai Shek. No wonder the Mensheviks, in their journals, welcomed and endorsed this policy of Stalin. Even when a repetition of Chiang Kai Shek's coup was underway, this time by the Left KMT, the Stalinists abased themselves at the feet of the bourgeoisie. The Eighth Plenum resolved,
“The ECCI insistently calls the attention of the Chinese Communist Party to the necessity of taking all possible measures for the strengthening and development of all mass organizations of workers and peasants ... within all these organizations it is necessary to carry on an agitation to enter the Guomindang, transforming the latter into a mighty mass organization of the revolutionary petty-bourgeois democracy and the working class.” (p 279)
The idiocy of such a stance is perhaps only exceeded in its application by Paul Mason, in his call for socialists to support NATO, and turn it into a force for workers interests across the globe. It is a goal shared by the AWL, as presented by Jim Denham, who already believe that NATO and the capitalist state defends workers interests!!!
““To enter the Guomindang” meant to bring one’s head voluntarily to the slaughter. The bloody lesson of Shanghai passed without leaving a trace. The Communists, as before, were being transformed into cattle herders for the party of the bourgeois executioners (the Guomindang), into suppliers of “workers’ and peasants’ blood” for Wang Jingwei and company.” (p 279-80)
And, today, the social-imperialists act as cattle herders, and suppliers of workers' blood for the benefit of the Ukrainian oligarchs/Zelensky/NATO, on one side, and the Russian oligarchs/Putin/China on the other.
Weston puts forward a cost of production theory of value, like that fallen into by Adam Smith, and used by the marginalists. This is different to The Labour Theory of Value, developed by Smith, in his analytical work, and pursued more consistently by Ricardo. The distinction resides in the social cost of production as against the capitalist's individual cost of production, and consequently the difference between the determination of value by the summation of costs of production, i.e. of the component parts of the commodity, as against the resolution of the value of the commodity into these component parts.
So, although Weston, and those who argue a cost of production theory of value never says that the value of commodities is determined by wages, this is what their argument amounts to. What they say is that wages are, say, £10, and the capitalist adds, say, 10% for their profits, and a further 10% to cover rent to the landlord, so that the price of the commodity is £12. As Marx says, this is the same thing as determining the value/price of the commodity by wages, because if wages double, to £20, with a fixed percentage addition for profits and rent, of 10%, the price of the commodity would also double to £24.
This is also the argument used, today, by Keynesians, and other marginalists, to claim that rising wages lead to inflation, via cost-push. But, its also used by Left Keynesians to argue that inflation is caused by other rising costs of production, as for example, Michael Roberts argument that current inflation is a result of rising costs following lock-downs, and supply constraints, as well as by rising profits, the latter being a mirror image of the argument of inflation arising from higher wages.
The value of the commodity is determined by the socially necessary labour required for its reproduction, i.e. the current value of the constant capital consumed in its production (means of production), plus the current labour, which resolves into wages and profits.
But, it is clearly quite different to say that the value of a commodity is determined by its social cost of production – by the total labour-time required – which value resolves into the reproduction of its components – constant capital, wages, profit – than to say that it is comprised of a summation of its component parts. If the value of a metre of cloth comprises £10 for constant capital, with a further £10 coming from the new value added by labour, then, if there is no change in productivity, its value will remain £20, as determined by this social cost of production, whether the £10 of new value resolves into £5 wages and £5 profit, or £8 wages and £2 profit, £2 wages and £8 profit.
A simple observation, Marx says, shows not only that there is no correlation between high wages and high commodity prices, but superficially, the opposite seems to be the case. British manufacturing wages were much higher than those on the continent, yet, everywhere, the prices of British manufacturers were lower than their European competitors. British agricultural wages were generally low, compared to elsewhere, and yet, British agricultural prices were higher.
And, the idea that the prices of commodities are determined by adding some given percentage for profit and rent, simply leads back to the same problem of what determines this given percentage?
“If they assert that they are settled by the competition between the capitalists, they say nothing. That competition is sure to equalize the different rates of profit in different trades, or reduce them to one average level, but it can never determine the level itself, or the general rate of profit.” (p 39)
As Marx sets out in Capital III, if the rate of profit, in one sphere of production, is higher than in others, capital will accumulate more rapidly in that sphere. The consequence will be that supply, in this sphere, will rise more rapidly than in other spheres, relative to demand, causing market prices to fall. As these prices fall, so the rate of profit, in that sphere, will fall. The opposite will occur in those spheres where the rate of profit is lower than elsewhere. This is the crucial role played by The Law of the Tendency For the Rate of Profit to Fall, in allocating capital in the economy, and consequent determination of a general rate of profit, and prices of production.
The argument that the value of commodities is determined by wages is a circular argument, because the value of labour-power is also determined by the value of the commodities required for its own production.
“On the whole, it is evident that by making the value of one commodity, say labour, corn, or any other commodity, the general measure and regulator of value, we only shift the difficulty, since we determine one value by another, which on its side wants to be determined.” (p 40)
It amounts to the tautology that value is determined by value. Value is determined not by wages – the value of labour-power – but by the total labour-time required to produce a commodity. That value is necessarily greater than the value of wages, which represent only the value of reproducing the labour-power, not just because of the value of constant capital, preserved in the labour process, but because the capitalist only employs labour on condition that the new value it creates is greater than the value of labour-power.
“It was, therefore, the great merit of Ricardo that in his work on the principles of political economy, published in 1817, he fundamentally destroyed the old popular, and worn-out fallacy that “wages determine prices,” a fallacy which Adam Smith and his French predecessors had spurned in the really scientific parts of their researches, but which they reproduced in their more exoterical and vulgarizing chapters.” (p 40-1)
10. Stalin Again Disarms the Chinese Workers and Peasants
Trotsky quotes from the speech of Chitarov at the Eighth Plenum of the CPSU.
“What was the policy of the CC of the Communist Party at this time, during this whole [Wuhan] period? The policy of the CC of the Communist Party was carried on under the slogan of retreat ...” (p 276)
In the Minutes, these dots are followed by a break. It signified that a section of the speech had been removed. The removal showed the treacherous nature of the Stalinist leadership. I have, previously, referred to the way the AWL use similar physical and logical chopping of historic texts, in order to treacherously bowdlerise the positions of Trotsky, Lenin etc. The removed section, presented by Trotsky, said,
“At the same time, some responsible comrades, Chinese and non-Chinese, invented the so-called theory of retreat. They declared: the reaction is advancing upon us from all sides. We must therefore immediately retreat in order to save the possibility of legal work, and if we retreat, we will save this possibility, but if we defend ourselves or attempt to advance, we will lose everything.” (p 276)
This illustrated the opportunist nature of the Stalinist position, in relation to the KMT. In the following section that was printed in the Minutes, Chitarov went on,
“Under the slogan of retreat – in the revolutionary period, at the moment of the highest tension of the revolutionary struggles – the Communist Party carries on its work, and under this slogan surrenders one position after another without a battle: To this surrender of positions belongs: the agreement to subordinate all the trade unions, all the peasant unions and other revolutionary organizations to the Guomindang; the rejection of independent action without the permission of the Central Committee of the Guomindang; the decision on the voluntary disarming of the workers’ pickets in Hankow; the dissolution of the pioneer organizations in Wuhan; the actual crushing of all the peasant unions in the territory of the national government, etc.” (p 277)
That could be an account of the Corbyn leadership, faced with an onslaught from the Right. The Stalinist advisors of Corbyn gave him similar advice, drawing up spreadsheets of potential allies and opponents within the PLP, which amounted to some kind of grading laundry into several degrees of dirtiness.
“Precisely in those days (end of May 1927), when the Wuhan counter-revolution began to crush the workers and peasants, in the face of the Left Guomindang, Stalin declared at the Plenum of the ECCI (May 24, 1927):
“The agrarian revolution is the basis and content of the bourgeois democratic revolution in China. The Guomindang in Hankow and the Hankow government are the centre of the bourgeois-democratic revolutionary movement.” (p 277-8)
For the independent commodity producer, this cost of production is the value of the commodities used in their production of the end product, plus the value they add via their own labour. For the capitalist producer, this social cost of production remains, but, now, takes the form of their individual cost of production, comprising the value of inputs, of which the commodity labour-power is just one. For the capitalist, their profit, now, also appears as a cost of production, as an amount they must be paid in return for advancing their capital. For each capitalist, the social cost of production determines the individual value of the commodity, but the cost of production for the capitalist, is always less than that, the difference being the surplus value/profit. The market value of a commodity is the aggregate of these individual values, which is equal to its social cost of production, the socially necessary labour-time, required for its reproduction.
As Marx sets out, in the Grundrisse, and Theories of Surplus Value, as far as demand is concerned, the determining factor is not value, but use-value/utility. I either like chocolate or I don't, which determines whether I will demand it or not; I either want two bars of chocolate, or only one. My desire for any of these things will certainly be influenced by its price, but my desire certainly does not determine the price. If I want a bar of chocolate, I have to accept that, to buy it, I have to pay its price, and that price is determined by its social cost of production. Demand can only determine the level of supply/production, not price/cost of production. It determines the level of supply/production, because producers will not continue to produce quantities in excess of what can be sold at the market value/price of production.
That, however, does not mean, as Mill, Ricardo and Say argued (Say's Law), that there can be no generalised overproduction of commodities, resulting in crisis, and a sharp fall, thereby, in market prices and profits. A Marx sets out in Theories of Surplus Value, Chapter 17, such an overproduction of commodities clearly can and does arise, where consumers choose to demand money, rather than other commodities. The crisis, then, is the means by which this overproduction is violently resolved, and during which the least efficient producers are removed, reducing supply. Of itself, this reduces the market value of commodities (because the market value is the aggregate of all individual values, and the inefficient producers, with higher individual values, are removed), but it is still above the clearing market prices created by the overproduction, so that those market prices rise again, once the overproduction is ended.
But, labour-power is also a commodity, and so its value is objectively determined in the same way. Wages are simply the market price of that commodity. As with any other commodity, that market price may move up or down from that value, but cannot determine the value itself. Moreover, Weston's argument was inconsistent. To argue that the level of wages was determined by supply and demand requires an acceptance that, if demand exceeds demand, then, wages should rise, yet, Weston only wanted to argue that wages could fall.
“If the demand overshoots the supply wages rise; if the supply overshoots the demand wages sink, although it might in such circumstances be necessary to test the real state of demand and supply by a strike, for example, or any other method. But if you accept supply and demand as the law regulating wages, it would be as childish as useless to declaim against a rise of wages, because, according to the supreme law you appeal to, a periodical rise of wages is quite as necessary and legitimate as a periodical fall of wages. If you do not accept supply and demand as the law regulating wages, I again repeat the question, why a certain amount of money is given for a certain amount of labour?” (p 36)
Of course, as Marx says, here, and Engels describes in The Condition of The Working Class, the determination of wages is not a subjective matter, of the will or greed of capitalists, of how much they are prepared to pay workers, but is imminently determined by the interaction of demand for and supply of that labour-power. However, the demand for, and supply of that labour-power are also determined by objective factors.
Attacking this Marxist position, the Stalinists of the ECCI, said, in relation to China, at its Eighth Plenum,
“The ECCI rejects most determinedly the demand to leave the Guomindang ... The Guomindang in China is precisely that specific form of organization where the proletariat collaborates directly with the petty bourgeoisie and the peasantry.” (p 275)
In other words, rather than the KMT being the party of the bourgeoisie, it was the realisation of the Stalinist concept of the “two-class workers and peasants party”. Trotsky cites the words of Rafes in the theoretical journal of the CPSU, whose argument could come from the mouths of social-imperialists, today.
““Our Russian Opposition, as is known, also considers it necessary for the Communists to leave the Guomindang. A consistent defence of this viewpoint would lead the adherents of the policy to leave the Guomindang, to the famous formula proclaimed by comrade Trotsky in 1917: 'Without a tsar, but a labour government!’, which, for China, might have been changed in form: 'Without the militarists, but a labour government!’ We have no reason to listen to such consistent defenders of leaving the Guomindang.” [Proletarskaya Revolyutsiya, p.54.]” (p 276)
The social-imperialists, today, adopt the same stance, to support NATO/Zelensky, in the case of one camp, and Putin/China in the other camp. Token references to the Ukrainian and Russian workers are thrown in, in order to give left cover to the reactionary war being fought by both sides, shrouded also in the psychedelic fantasy of a “people's war”, as against the reality of the actual war being fought out by two not only heavily armed, but nuclear armed imperialist camps.
“The slogan of Stalin-Rafes was: “Without the workers, but with Chiang Kai-shek!” “Without the peasants, but with Wang Jingwei!” “Against the Opposition, but for the Guomindang!”” (p 276)
Today, the slogan of the social-imperialists is 'against the Marxists and International Socialism, but with NATO and Zelensky', in one camp, and 'with Putin/China' in its mirror image. And, illustrating the hypocrisy of the AWL, whilst they argue this position that not defending “Ukraine” is equal to supporting Russia, when it comes to the Zionists genocidal massacre of Palestinians in Gaza, not only are they silent in arguing that failure to defend Gaza is equal to supporting the Zionist state, but they vociferously proclaim the right of that Zionist state to “defend itself”!
Weston only argued against rising wages on the basis of the supposed negative economic consequences that flowed from it for workers themselves. But, as part of this argument, he spoke in purely subjective terms about wages being high or low. However, to talk about wages being high or low is meaningless, unless it is stated against what they are being compared, and also, to state what metric is being used. If we take temperature, then, measured in centigrade, the boiling point of water is 100 and freezing 0. In Fahrenheit, however, it is 212, and 32. So, to say that 100 degrees is hot is meaningless, unless we know whether this is 100 degrees Centigrade or Fahrenheit. However, 100 degrees of either may be described as hot compared to 0 degrees of the same metric, but is meaningless without this comparison.
It is not the whim of makers of thermometers that determines the boiling point is 100 degrees centigrade, and the freezing point 0 degrees. They are determined by natural laws. As Marx sets out, in Capital and elsewhere, the values of commodities, of which labour-power is one, are determined, not by natural, but by economic laws. It only makes sense to describe wages as high or low when compared to such objectively determined value.
“He will be unable to tell me why a certain amount of money is given for a certain amount of labour. If he should answer me, “This was settled by the law of supply and demand,” I should ask him, in the first instance, by what law supply and demand are themselves regulated.” (p 35)
Supply and demand, as Marx sets out in Capital, and Theories of Surplus Value, can never explain the actual value or price of a commodity, including labour-power. They can only explain movements of market prices, up or down. If demand exceeds supply, market prices move up, and vice versa. But, this movement, up or down, implies a movement away from some other price, a price at which both supply and demand would be equal – the equilibrium price, as orthodox economics calls it.
But, then, at this price, the power of demand and supply to explain anything ceases, because it is no longer a question of explaining why the market price moves up or down, but of explaining why it is £1 rather than £10, or £100. To say, as the subjectivists, like Samuel Bailey, or the neoclassical economists, did that it is because, at this price, the sellers of commodities are prepared to sell, just as much of the given commodity as consumers want to buy is no answer at all, because it simply pushes the analysis back a further step to the question of why sellers are prepared to sell that quantity, at that price, and why buyers demand that quantity at that price. Marx sets this out, at great length, in Theories of Surplus Value, Chapter 20.
The reason that sellers are prepared to sell a given quantity, at a particular price, is that the commodity, itself, has an objectively determined value, which, in a money economy, takes the form of a cost of production. The producer of the commodity will not, willy-nilly, produce the commodity in quantities that can only be sold at prices below this cost of production. The value/cost of production of the commodity, then, becomes the determining factor. If suppliers can sell the commodity at this value, they will produce and supply it. If not, some of the least efficient suppliers will go out of business, and supply will be reduced, so that market prices will rise, and remaining producers can sell their output. If demand exceeds the supply, so that suppliers get more than the cost of production, they will be incentivized to produce more, and additional suppliers will enter production.
The Opposition argued for leaving the KMT. Did this mean abandoning the revolution? Of course not. As Marx had set out, in 1850, it does not prevent the workers from establishing tactical alliances with other forces, on an ad hoc, or even more structured basis. What it does do is to protect the class interests of workers, emphasise their separate and antagonistic interests to those of the bourgeoisie, petty-bourgeoisie, and peasantry. It emphasises that, at some point, these bourgeois classes will betray them, and prepares for it.
Today, when Marxists argue against supporting the war of the Ukrainian state, this is presented as abandoning the defence of Ukrainian workers. Not at all. We argue that such defence can only, really, be achieved by the independent organisation of those workers, and not by their subordination to the Ukrainian capitalist state, or Zelensky's corrupt regime. The same applies to Russian workers. The liberal opportunist position, in that regard is the same as that put forward by the Russian liberal Ivan Kirillovic, in 1912, to justify liberal interventionism by imperialism in the Balkan Wars. Kirillovic argued in identical words to that of the social-imperialists today,
“... we can't shut our eyes to the fact that what is involved here is the liberation of Slav people from Turkish rule. Not to sympathise with such a war, not to support it, would simply mean to support, indirectly if not directly, Turkish rule over Slavs.”
(The Balkan Wars, p 325)
Rejecting this idea that socialists and the working-class have the same shared goal as “liberal” or “democratic” imperialism, in overthrowing such oppression, Trotsky wrote, in response to Kirillovich,
“The emancipation of the Macedonian peasantry from feudal landlord bondage was undoubtedly something necessary and historically progressive. But this task was undertaken by forces that had in view not the interests of the Macedonian peasantry but their own covetous interests as dynastic conquerors and bourgeois predators...No, there is consequently no need to idealise the Turkish regime or the regime of Russia's village community in order to express at the same time one's uncompromising distrust of the uninvited 'liberators' and to refuse any solidarity with them.”
(ibid)
Trotsky, expanded on that, in a response to the Russian liberal Miliukov,
“But it is not at all a matter of indifference by what methods this emancipation is being accomplished. The method of “liberation” that is being followed today means the enslavement of Macedonia to the personal regime in Bulgaria and to Bulgarian militarism; it means, moreover, the strengthening of reaction in Bulgaria itself... only a struggle against the usurpation of history's tasks by the present masters of the situation will educate the Balkan peoples to play the role of superseding not only Turkish despotism but also those who, for their own reactionary purposes, are, by their own barbarous methods, now destroying that despotism...
Our agitation, on the contrary, against the way that history's problems are at present being solved, goes hand in hand with the work of the Balkan Social Democrats. And when we denounce the bloody deeds of the Balkan 'liberation' from above we carry forward the struggle not only against liberal deception of the Russian masses but also against enslavement of the Balkan masses.”
Genocide Joe has, eventually, stood down as the Democrat candidate for the Whitehouse, despite the fact that it has been clear for at least a year that he was not in full control of his faculties, and was gifting the election to Trump. The reason the Democrat establishment ignored that, and pressed ahead with his nomination, was always relatively clear, and has, now, been confirmed. They knew that if Biden stood aside, it would open the door to a political debate and struggle, inside the party, over which they did not have full control, as seen in the last two elections when they had to pull out all the bureaucratic stops to prevent Bernie Sanders getting the nomination. By leaving it until last minute, just as with the selections of Labour MP's, it put control in the hands of the party machinery, allowing them to by-pass even the limited party democracy.
By waiting until what is, for US elections, seen as the last minute, before Genocide Joe stood aside, it has avoided any internal political debate and struggle, based around alternative candidates, and means that they were able to just effectively impose Holocaust Harris as their chosen candidate, instead. In reality, of course, there is plenty of time to have a democratic selection process inside the party, to select a candidate, because the election is not until November. As some US commentators have noted, in Britain and other European countries, the election campaign is conducted in just six weeks, meaning that the Democrats really don't need to have chosen a nominee until around the end of September.
The reason, the Democrat establishment is saying there is no time, is because that plays into their hands of saying they must simply crown Holocaust Harris as their candidate for elected US Monarch, again indicating the sham nature of bourgeois-democracy. Indeed, the reason that the US electoral system has, historically, been such a prolonged affair, is simply a reflection of its, actually, undemocratic and sham nature, in which what really counts is money, and the backing of powerful sections of the US ruling class. The nature of primaries, as a means of selecting candidates for parties removes the real power of rank and file members of the party, enabling anyone who simply registers as a supporter of the party, to have a say in the selection of the candidate, including people who, actually, support the opposing party! It means that, in a system where the political differences between the two parties are minimal, a long election period reduces it to a slanging match of personal insults, and accusations, conveyed via very, very expensive advertising campaigns.
As an indication of that, in the first 24 hours, after Genocide Joe stepped aside, Holocaust Harris received $100 million in campaign donations. Its all a Kabuki Theatre show version of democracy. In 2020, Harris was a potential candidate, but only managed to secure around 2% of support from Democrats (about like Liz Kendall against Corbyn in 2015), and there is no reason to think she would have done better in an actual competitive race, this time. The Democrat establishment knew that. In fact, she would undoubtedly have done worse.
Although, the narrative is being presented that Harris's position, on the genocide being committed by the Zionist state against Palestinians, is better than that of Genocide Joe, the reality is that she has been stood alongside him all the way through it, as have other leading Democrats, not to mention all those European leads, like Scholz, Van Der Lyen, Macron, and Starmer, whose actions quite clearly, now, as a result of the findings of the ICC and ICJ, amount to them being guilty of war crimes. Of course, none of them will ever be hauled before the court to answer for that, again demonstrating the sham nature of bourgeois-democracy and the so called international rules based system.
The Democrat establishment may be able to convince a sizeable number of Democrat voters, over the coming months, that Holocaust Harris should not be held accountable for the war crimes committed by Genocide Joe, as they scramble, now, to get the votes of Arab and Palestinian Americans, but they would never have been able to convince the rank and file members of the party of that, as many of them, already refused to vote for Biden in selection meetings earlier in the year.
As Starmer found, in Britain, and as Macron found in France, their bet that these voters would hold their nose and vote for them, rather than see a Sunak or Le Pen elected, failed. Macron's party got smashed, in the European elections, and has only been saved in the subsequent Assembly elections by a rotten bloc, Popular Front, that stood down candidates in support of them, in the second round, thereby, undermining its own position in the coming months, and ahead of the next Presidential elections.
In Britain, Starmer's reactionary nationalist, Blue Labour performed worse than Corbyn's Labour, in terms of votes, in 2019, which was supposed to have been the worst performance since 1939. Compared to Corbyn's Labour, in 2017, Blue Labour obtained a third less votes, and lost 6% points of the vote share (a drop of around 16%). Even in those seats it targeted its activity, Blue Labour either lost votes, or barely increased them, compared to, even, 2019. Compared to 2017, in every seat, almost without exception, it lost votes, and vote share compared to Corbyn's Labour. It was only the intervention of its fellow reactionary nationalists of Reform that split the Conservative vote in half, which enabled Labour to win. In every seat, add together the Reform and Conservative vote, and Blue Labour would have lost, reducing its overall position in parliament, again, to worse than that of Corbyn's Labour in 2019!
So, clearly, the Democrat establishment need to have time to put billions of dollars into propaganda, to sell the line that Holocaust Harris is not just the lesser-evil compared to Trump, but that she had a better position on genocide in Gaza than Genocide Joe. She didn't, and doesn't, and there is no reason to think that as President there would be any real change in position. There will be no ending of the massive arms supplies to the Zionist rogue state, no recognition of the genocide it is undertaking, and so on. And, as Owen Jones has pointed out, the line is being given that the issue over Biden was his senility and mental state, but the reality is that he was and is a monster, just as much as Putin, or Xi, or any of the other imperialist butchers around the world.
As Genocide Joe had said decades ago, if Israel didn't exist, the US would have to have created it, as it is the means of US imperialism exerting its will across the Middle-East. From the early 60's, the only reason that the Zionist state has continued to exist, is because US imperialism has enabled it to do so, and, indeed, to expand in line with its Zionist, colonialist nature. US imperialism is not going to demur from that position, now that the Zionists are on the brink of wiping out the Palestinians, much as the US did with the Native Americans, and British colonialism did with the aborigines in Australia, in the 19th century.
But its not just that Holocaust Harris is as responsible as Genocide Joe for US support for the Zionists, she is also responsible for all of the other policies of Biden during that period. In supporting Harris from attacks by Trumpists, Democrats have praised her role in jailing illegal immigrants, for example! There is no reason to think that Harris position on immigration will be any more progressive than that of Biden., and the same applies in a whole range of other anti-working class policies implemented by Biden-Harris over the last four years.
The Democrat establishment have also played the identity politics card. How will it look to oppose the first black, woman candidate they protest, as though colour and gender have anything to do with the politics of the candidate. As I wrote at the time of Obama's victory, in 2008, anyone expecting him to improve things for black Americans would be sadly disappointed. That hasn't changed, and Harris record, as a prosecutor was pretty appalling in that regard too. Again, for anyone deluded by the claims of the identity politics argument, I give you the examples of Margaret Thatcher and Theresa May, in Britain, or currently, Marine le Pen, and Meloni in Italy.
This shows why workers in the US, as elsewhere, need an independent, revolutionary party of their own.
As Marx described in A Contribution To The Critique of Political Economy, if the total value of commodities to be circulated rises, either because the average unit value rises, but the volume remains the same, or because the average unit value remains the same/falls, but the volume expands, more currency is required, if the velocity of circulation remains constant, and the amount of credit transactions is unchanged – MV = PT. If the total value of commodities to be circulated falls, then, inter alia, if the amount of currency is not reduced, the unit value of the standard of prices falls, and unit prices rise.
But, as Marx sets out, in fact, as economies expand, a greater proportion of exchanges take place on the basis of credit, thereby, reducing, proportionally, the amount of currency required. A quickened pace of economic activity, means also a rise in the velocity of circulation of currency, and proportional reduction in the quantity required. When Weston and Marx refer to currency, they mean, here, gold coins, because of the convertibility into gold of money tokens.
“Compare the year 1862 with 1842. Apart from the immense increase in the value and amount of commodities circulated, in 1862 the capital paid in regular transactions for shares, loans, etc. for the railways in England and Wales amounted alone to 320,000,000 Pounds, a sum that would have appeared fabulous in 1842. Still, the aggregate amounts in currency in 1862 and 1842 were pretty nearly equal, and generally you will find a tendency to a progressive diminution of currency in the face of enormously increasing value, not only of commodities, but of monetary transactions generally. From our friend Weston's standpoint this is an unsolvable riddle.” (p 32-3)
Why was that? Because, in the intervening period – a long wave uptrend, ran from 1843 to 1865 – an increasing proportion of trade was conducted on the basis of credit transactions, paper bank notes increased, replacing gold coins, and improved banking raised the velocity of circulation.
“Looking somewhat deeper into this matter, he would have found that, quite apart from wages, and supposing them to be fixed, the value and mass of the commodities to be circulated, and generally the amount of monetary transactions to be settled, vary daily; that the amount of bank-notes issued varies daily; that the amount of payments realized without the intervention of any money, by the instrumentality of bills, cheques, book-credits, clearing houses, varies daily; that, as far as actual metallic currency is required, the proportion between the coin in circulation and the coin and bullion in reserve or sleeping in the cellars of banks varies daily; that the amount of bullion absorbed by the national circulation and the amount being sent abroad for international circulation vary daily. He would have found that this dogma of a fixed currency is a monstrous error, incompatible with our everyday movement. He would have inquired into the laws which enable a currency to adapt itself to circumstances so continually changing, instead of turning his misconception of the laws of currency into an argument against a rise of wages.” (p 33)
According to Stalin, after the coup, two camps/governments existed – a revolutionary government in Wuhan, i.e. that of the Left KMT, and a counter-revolutionary government of Chiang Kai Shek, in Nanking. Stalin said,
“This means that the revolutionary Guomindang in Wuhan, leading a decisive struggle against militarism and imperialism, will in reality be transformed into an organ of the revolutionary democratic dictatorship of the proletariat and peasantry ...” (p 275)
Trotsky comments,
“Now we finally know what the democratic dictatorship of the proletariat and peasantry looks like!” (p 275)
In other words, this, according to Stalin, is what Chinese bourgeois-democracy looked like.
“From this it follows further [Stalin continues], that the policy of close collaboration of the lefts and the Communists inside the Guomindang acquires a particular force and a particular significance at the present stage. that without such a collaboration the victory of the revolution is impossible.” (p 275)
But, as in 1848, and previously, in 1927, the result was predictable. Having, now, subordinated the workers to the Left KMT, they too betrayed the revolution. Parallels with this can be found repeatedly inside the Labour Party, too, as each section of a broad left capitulates, and some new, less broad formation becomes the new hope, and subsequently new disaster.
“Without the collaboration of the counter-revolutionary bandits of the “Left” Guomindang, “the victory of the revolution is impossible”! That is how Stalin, step after step – in Canton, in Shanghai, in Hankow – assured the victory of the revolution.” (p 275)
Still, it is not as bad as the position of the social-imperialists of the USC/AWL/ACR etc., who, with the benefit of another century of such betrayals, still manage to ally themselves not only with the bourgeoisie and its state, but also with NATO imperialism, on the basis of a broad “anti-imperialist front”, against Russia, and the claim that the workers most visible, and most powerful class enemies, are, in fact, their saviours, and defenders of its interests!!!
Total wages, in the UK, were around £250 million, Marx noted, but were circulated with only around £3 million of currency. Most of this currency, used for wages, took the form of metallic money tokens – silver and copper – whose value, in relation to gold, was fixed by law rather than their own metallic content, i.e. a fiat currency. If wages rose by 50%, £4.5 million would be required, but, because of the role of money tokens – both coins and paper notes – Marx sets out why not one single extra sovereign would be required.
Suppose of the additional £1.5 million, £1 million takes the form of gold sovereigns.
“One million, now dormant, in the shape of bullion or coin, in the cellars of the Bank of England, or of private bankers would circulate.” (p 29-30)
In other words, no additional sovereigns need be minted, only existing sovereigns, sitting idle, are activated.
“But even the trifling expense resulting from the additional minting or the additional wear and tear of that million might be spared, and would actually be spared, if any friction should arise from the want of the additional currency. All of you know that the currency of this country is divided into two great departments. One sort, supplied by bank-notes of different descriptions, is used in the transactions between dealers and dealers, and the larger payments from consumers to dealers, while another sort of currency, metallic coin, circulates in the retail trade. Although distinct, these two sorts of currency intermix with each other. Thus gold coin, to a very great extent, circulates even in larger payments for all the odd sums under 5 Pounds. If tomorrow 4 Pound notes, or 3 Pound notes, or 2 Pound notes were issued, the gold filling these channels of circulation would at once be driven out of them, and flow into those channels where they would be needed from the increase of money wages. Thus the additional million required by an advance of wages by fifty per cent would be supplied without the addition of one single Sovereign. The same effect might be produced, without one additional bank-note, by an additional bill circulation, as was the case in Lancashire for a very considerable time.” (p 30)
By bill circulation, Marx means an increased value of bills of exchange, i.e. commercial credit between firms. In other words, this is the point made earlier that a larger proportion of commodities may be exchanged on the basis of credit, reducing the amount of currency required. The inflation of prices that Weston and, today, Keynesians, blame on rising wages, is, in fact, a result of this expansion of the currency supply/credit that devalues the standard of prices. Marx illustrates this, in reverse, by looking at what happened in the crisis resulting from the US Civil War, and blockade of cotton supplies to Britain.
As a result of the crisis, UK textile wages fell by 75%.
“This, then, was a sudden change in the rate of wages unprecedented, and at the same time extending over a number of operatives which, if we count all the operatives not only directly engaged in but indirectly dependent upon the cotton trade, was larger by one-half than the number of agricultural labourers.” (p 31-32)
On the basis of Weston's argument (and the same applies to all those, today, like Larry Summers who looked to a 50% rise in unemployment, as the means to reduce US inflation) this reduction in wages should have resulted in a fall in demand for wage goods, which consisted largely of agricultural products, such as wheat, as bread comprised a large part of the workers' diet. It should, also, have meant a significant reduction in the currency supply. Today, the Keynesians, like Summers, make this argument for a 50% rise in unemployment, so as to put downward pressure on wages, to reduce demand-pull inflation.
In fact, as the US has shown, rather than unemployment rising, it has continued to fall, and employment continued to rise strongly. That has also fed into continued strong consumption demand, fuelling aggregate demand, and growth of the US economy. Yet, as the Federal Reserve, has continued its policy of Quantitative Tightening, as the value and volume of output has risen, bringing about a relative reduction in currency supply, US inflation has fallen faster than in other economies, which have grown much more slowly.
“Did the price of wheat fall? It rose from the annual average of 47 shillings 8d per quarter during the three years of 1858-1860 to the annual average of 55 shillings 10d per quarter during the three years 1861-1863. As to the currency, there were coined in the mint in 1861 8,673,323 Pounds, against 3,378,792 Pounds in 1860. That is to say, there were coined 5,294,440 Pounds more in 1861 than in 1860. It is true the bank-note circulation was in 1861 less by 1,319,000 Pounds than in 1860. Take this off. There remains still a surplus of currency for the year 1861, as compared with the prosperity year, 1860, to the amount of 3,975,440 Pounds, or about 4,000,000 Pounds; but the bullion reserve in the Bank of England had simultaneously decreased, not quite to the same, but in an approximating proportion.” (p 32)
In other words, the rise in wheat prices had nothing to do with wages, either in relation to demand-pull or cost-push, because, during this time, wages had fallen catastrophically. The rise in prices was the result of additional currency thrown into circulation, causing a reduction in the value of the standard of price. Similarly, the reduction in inflation – not in this case an actual fall in prices – in the US, over the last year, is not the result of a fall in wages – which have been rising on the back of continued strong growth of jobs, and labour shortages – but of the effect of QT.
I went back home to Goldenhill, last night, to the Northern Soul and Motown night at the Community Centre. Its actually, the third time I've been, now, and is rapidly becoming one of my favourite venues, and last night was the best attended, yet, though the large hall, and dance floor easily accommodated everyone, with plenty of seating, as well as the free buffet.
The dance floor, is one of the biggest you will find anywhere with current venues, apart from places like the Kings Hall, in Stoke. Obviously, having been born and grown up in Goldenhill, that was no news to me, though it had been some time since I'd been inside, so I was glad to see it was as big as I remembered it.
The first ever time I remember going dancing there was, when I was about 12 or 13, which was to just a run of the mill disco of the time, with a local pop group also playing. A while ago, going through some old stuff, I even found an autograph from the group, the Quantrells. The only other things I remember about it was everyone dancing to March of The Mods, and one of my school friends, Paul Matusa, who was Romanian, turning up wearing an Indian style, long floral patterned coat, like the ones the Beatles were wearing at the time. There again, a year or so later, I turned up to my sister's wedding wearing a bright orange double breasted, three-quarter length jacket. Fortunately, fashion sense has improved.
It was good to see the new generation of Northern Soul dancers there, in the shape of Connor, who I got to talk to, and compare notes, between us both doing splits and back drops. (Though I'm still impressed with this other geezer in the hat's backdrops, dancing with Connor, in this video from Nantwich last year.)
Some good fast tracks played to dance to as well, including "All Turned On", which I haven't heard played, anywhere, for ages.
Back to another old haunt, next Saturday, at Kidsgrove Town Hall. Can't wait.
