Thinking Outside the Box

I was watching the BBC Four series on the rise and fall of Thatcherism – “Tory, Tory, Tory”. It showed that besides the role played by Hayek, and the other Libertarians around him in influencing the ideologues around Thatcher the run up to Ridley’s plan to take on the unions also began by John Hoskyns – a former systems analyst – developing a huge systems diagram to assess what were the strategic targets the Tories needed to attack. They decided that at every key point the answer was the same – the unions. Of course, that is not surprising, the unions are the basic organisational form of the working class, its means of economic defence against the power of capital. But it set me thinking as to whether a similar approach might be taken by the working class.

In reality we know what our strategic target is too. It is Capital itself. As Marx points out, our theory is not based on envy or greed against Capitalists, we are not moral socialists, but scientific socialists. Capitalists, themselves are as much the prisoner of Capital as are the workers, though there prison is one most would not mind being condemned to. Whatever, the morals of the individual capital, no matter how philanthropic the individual capitalist might be each is constrained to act in pretty much the same way by the power of Capital over them as much as the power of Capital over workers. Whatever might be the intentions of the individual capitalist, Capital must accumulate or die. And it is that fact which creates all of the attendant ideological superstructure of capitalism, the notion that competition is inevitable (indeed good as a means of reducing prices), the notion that profit must be produced by every firm and consequently that workers must sell their labour-power at a price which guarantees that profit, the idea that wealth is the product of the accumulation of this capital (which in a sense it is), and that consequently the private owners of this Capital are the real wealth creators without whom workers cannot survive. Unfortunately, the experience of Stalinism and of nationalised industry (in Britain though not so clearly in Europe) have only confirmed that ideology as Stalinism’s attempt to bureaucratically plan the economy necessarily ended in chaos and low living standards for workers as well as the workers themselves being oppressed, and capitalist nationalised industry as the Miners’ Strike demonstrated, just gave the capitalists a bigger stick with which to exploit the workers, lacked any democratic content that would have ensured that such industries met the needs of workers as consumers, and instead became milk cows for other capitalist suppliers, and the bureaucrats put in charge of running them.

The obvious solution to this is for workers to simply seize all of this Capital in a thoroughgoing revolution such as that in Russia in 1917, and having laid hold of the Capital to begin to transform it back from being Capital that has power over men to being merely tools, and means of production at the disposal of men to meet their needs as human beings. But there is a problem with this idea. The problem is that precisely because of the power of Capital over men, because of the ideological superstructure that has arisen on the back of capitalist relations of production over the last 200 years in particular, and the promulgation of that ideology as being “human nature”, the natural order of things, by the capitalist media, inculcated into children by their families even subconsciously as they were themselves inculcated with it as children – rather like the way religion is absorbed, or a belief in Santa Claus – getting workers to see the need to upset that “natural order of things” is no easy task. Indeed the longer capitalism goes on the more it appears to be not only the natural order of things, but also the way things have always been. An example, was the drama “Rome” on TV a while ago. I never actually watched it, but was put off by a clip which talked about the problem of “unemployment”, as though Ancient Rome ran along capitalist lines with capitalists and workers as the main classes with workers suffering unemployment periodically as they do today.

It was this problem that led Lenin to the conclusion that this condition of the working class as a slave class right up until it takes power makes the achievement of socialist working class consciousness an impossibility for the majority of the working class, and that, therefore, the revolution must be led by a vanguard,
a small group of professional revolutionaries, people who have cut free of these ideological binds that constrict the working class in general, a group which can influence the wider workers movement, and prepare for those infrequent occasions when the old system can no longer continue ruling in the old way, and the ruled are no longer prepared to be ruled in the old way.

But, as I have argued, in many other places, I believe this concept, developed by Lenin, is, in fact, non-Marxist. It substitutes the actions of a small, revolutionary party for the actions of the working class, it substitutes the role of ideas for the role of material conditions, as the determining force in historical change – as Lenin puts it politics dominates economics – and, by setting up this model of social change, it inevitably leads to a top down conception of socialist construction. Having taken over state power, the revolutionary party’s role becomes the driving force of socialist construction through the state apparatus. The revolutionary fervour of the working class having been based on a resentment of the old ways rather than an ingrained socialist class consciousness driving them forward to take control of society for themselves, begins to wane, old ideas begin to creep back into it and a necessary schism develops not just within different sections of the working class – and peasantry where they form a significant section of society – but necessarily between the workers and the revolutionary party, and state apparatus. Confirmed in its belief that it knows best, that the workers, as Lenin had said, remain dominated by bourgeois ideas, the revolutionary party increasingly uses the state to suppress counter-revolutionary outbursts by workers, but, in reality, it is the state, created by the revolutionary party, in the name of the workers, which has become counter-revolutionary. We have arrived at Stalinism in whatever flavour.

The ideas are developed in these posts:

Vanguards, Revolution and Socialist Transition

Marx on the Party

Reform and Revolution

The Workers Party

Class Consciousness and Revolutionary Consciousness

Schactman and Leninist Apologism

Marxists, Leadership and Engels on the Workers Party

It is for the reasons outlined above, that I have now rejected those aspects of Leninism. That is not to say I have rejected everything that Lenin says, not even everything in terms of his writings on organisation. I can fully appreciate the need for a tightly organised group of Marxists, or even several such groups, if they cannot find sufficient agreement to exist within the same organisation, to develop their ideas, to propagandise for those ideas, and to fight for them within the workers movement, but not to exist as a separate party from the Workers Party, which must be the first priority, for all Marxists, to develop outside consideration for development and building of their own small organisation.

But this then leads back, rather circuitously, to the beginning of this post. If socialism is not to arise from some revolutionary situation, out of which the revolutionary party seizes state power, how is it to come about? I believe the key is to reject the dichotomy between reform and revolution, a dichotomy I believe to be false, and which has its origins within the factional debates, within the Marxist movement, at the end of the 19th/beginning of the 20th century.
If the key to the Thatcherite strategy was to attack the power of Labour by attacking the Trade Unions, how can workers attack the power of Capital as a means of weakening it, and strengthening themselves as the precursor to defeating it, and achieving domination over it? In short what reforms can workers demand which achieve this end, what quantative changes can be undertaken that ultimately turn into a qualitative change in the relations of production? How can these reforms and other changes be fought for, and won?

A part, I think, is being manifested, before our eyes, in the struggles of workers in Argentina, for example at the Xanon ceramics factory, where a co-operative has been established, by workers, that is integrated into the local community, and the class struggle of workers throughout Argentina.

There seems to me a number of changes that have occurred since the time of Lenin, and certainly from Marx’s time, that need to be incorporated into the Marxist world view, and into our strategy. The first thing is that the concept of the working class as a slave class seems to me an absurd dogma to maintain in most capitalist economies today. The working class is educated, has access to culture, leisure and even to some extent capital that could never have been envisaged by Marx, and was not the case for Russian workers in Lenin’s time. True the education, the culture, and the leisure activities remain dominated by bourgeois ideology they are undertaken by workers on an atomised individualistic manner, rather than as activities undertaken as workers in a consciously collective way, but there is no reason why that has to be the case. It is, in fact, a result of weakness, by Marxists, and the workers movement in general, that that is so. In fact, you don’t have to go back too far, in history, to a time when it was, in fact, being challenged. Think of the Plebs, the various workers reading groups that used to exist, the social and leisure activities that used to be organised by the Young Socialists, the Co-op etc. Moreover, teachers are workers too. Indeed, many are socialists. Acceptance of curricula, dominated by bourgeois ideas, is not something that has to be accepted, it is open to challenge.

There seem, to me, also changes, within capitalism, that provide openings, for socialists and for the workers movement. Technological changes, for example, mean that ideas, such as these, can be transmitted to millions of workers around the globe, at virtually no cost, and instantaneously. Further changes in technology are breaking down the grip of capital on the dissemination of ideas. Look at TV News. Increasingly, they are asking people to send in their own digital images, video etc. because they realise that they can cover almost any news story instantaneously, without the need to employ their own news crews and technicians. This will have a dramatic effect, in the near future, on workers in these industries. But, it also opens massive possibilities for socialists and the workers movement too. Before long, no one will watch TV as they do now.
Everything will be downloaded to PC’s and mobile devices over broadband connections. That means that every socialist organisation can have its own TV station at very little cost. If the workers movement had its act together, it would be doing it now. Instantaneous news, sent in from people with digital videos, or mobile phone cameras, giving a workers perspective of strikes, demonstrations etc., sent out in a video stream, to every worker with a PC or mobile phone to receive it.

This relates to another aspect of the development of capitalism. Marxists have always argued that, as Capital develops, it becomes ever more concentrated. The economies of scale favour larger production, the larger firms are more efficient, make more profit, accumulate faster, employ more up to date equipment, become more efficient, become bigger and so on. But, in some of the most important aspects of modern capitalism, this is not true. I suspect, for instance, that as far as media is concerned, there will be a growth of small independent media producers, who bear the risk of production and sell their products to the media outlets. The reason that is possible, is because technology has significantly reduced the cost of the equipment required for media production, so a much larger number of enterprises can enter that area of production.
Michael Moore has shown that you do not have to be a Media Mogul to do this, and at the same time, he has shown that, as long as what you produce is good quality, there is a market out there for material that is critical of the status quo. The Socialist Movement has rarely been short of creative people capable of producing good quality material that could meet this need. It is being slow to take up the opportunities being presented to it. Imagine if this website not only provided written propaganda, but also provided free streamed video of workers news, free 24 hour a day, seven days a week video of socialist films, dramas etc., was a gateway for new productions, music, stories, and other material produced by working class artists, that otherwise would not get a hearing.

But it is not just in the realm of ideas that such changes open opportunities for workers and socialists. Take software production for instance. Its true that the massive monopolies, like Microsoft, have huge advantages and the ability to dominate the market. But, the example of Linux shows that such monopolies can be challenged, and Linux, developed organically and co-operatively, by its users and programmers, around the world, itself demonstrates an alternative to capitalist production. The cost of software production resides not in massive capital requirements, but in the creativity and intellectual capacity of the programmers that develop it. For very large applications, like Windows, and its attendant programs, like Office, having large teams of programmers is necessary, but, for many more specific applications, it would offer no great advantages, on the contrary, a small team of programmers could work more co-operatively on a specific task than a large one. The other capital cost, then, is in the actual physical replication of the software on to media, but most software companies now outsource that work. In short, the kind of objections that Marxists have had, in the past, to utopian schemas, of “islands of socialism”, no longer apply to many of the more important aspects of production, important because, unlike the failed worker co-operatives of the past, which were attempts by workers to save their jobs, in already dying industries, these new areas are ones at the cutting edge of the economy, high value added industries, but in the case of the above important also because of their role in terms of the dissemination of ideas.

I saw recently that in California's San Fernando Valley, even Porn Actors have come together (no pun intended) to create their own Co-operative that produces, and distributes their work so that they have full control over their Labour Power, and the profits do not go to some Capitalist. That is not insignificant. The Porn Industry in America is a multi-billion dollar business, and it is generally accepted that, without it, the Video and now the Internet and DVD market would have been much slower to develop as important industries and technologies.

But, if such new industries were to be more than just small co-operative enterprises, run on capitalist lines – Linux remains the product of capitalist enterprises such as Red Hat for example – then more is required than this. The example, of the workers in Argentina, I think, will be instructive here. From the reports I have read of the workers at Xanon, they have not just attempted to run the factory as a self-contained enterprise. They have integrated it with the community, in which they live, and, in doing so, that begins to challenge the capitalist mode of production, in general, if only on a small scale. It has the power to spread out. They have also made links with workers, in other co-operative factories, which is also fundamental to such enterprises not being isolated. The whole basis, of a socialist organisation, of the economy, is that each enterprise does not operate as an individual unit, but is integrated with all others. That is the basis of building organic links between such enterprises, and the foundation on which the development of an organic, democratic workers plan can be formulated.

How does that relate to the present situation, for most workers, and how could such co-ordination by workers be developed in Britain, and in Europe? In discussing the crisis of pensions, the example of the scheme, in Sweden, has been raised, as a means by which capital can be forced to pay for pensions.

"The answer was already seen by someone who was, in my opinion, one of the most far-sighted strategists of the European workers’ movement of the last fifty years — Rudolf Meidner, the chief economist of LO, the main Swedish trade union organisation.

Meidner understood that the Swedish welfare state was a sort of compromise between labour and capital. In the 1970s, he said, comrades, we have come to the point where either capital moves against us, or we move against capital. At the 1975 national convention of LO, he set out the need for what he called wage-earner funds.

He argued for requiring every corporation employing more than 50 people to contribute 20% of its profits each year in the form of new shares, to be held by the wage-earner funds as a social reserve.

He saw the problems looming up, and he said that either they would tip the balance in favour of labour, or in favour of capital. The wage-earner funds were the way to tip things in favour of labour and its social allies.

Meidner was a social democrat, but from a Marxist tradition. He was German-Jewish, not Swedish, in origin, and was a disciple of Rudolf Hilferding.

From the 1950s onwards he designed the Swedish welfare system to ensure decent benefits without unemployment. Right down to this day, even though aspects of Meidner’s proposals have not been introduced, and Sweden has abandoned many of Meidner’s ideas, official unemployment is under 5% in Sweden while it is 10% in Germany and France.

The wage-earner funds proposal was implemented by Olof Palme in a quite diluted way in 1982. It worked for about ten years, and the funds acquired a stake of about 7% of the Swedish stock market. Workers did not have proper control of the wage-earner funds, which had been the original idea, but even so they were seen as a big threat by the twenty families which dominate Sweden’s economy."

See:Robin Blackburn - on Pensions "A Fight that Must Challenge Capital


The problem, with the Swedish scheme, was demonstrated by what happened to it. A change of government led to the scheme being scrapped. This, indeed, is the problem with relying on reforms, introduced through the bourgeois state, rather than won by, and under the control of, the working class, they are liable to be taken away. In my opinion, it would have been better for workers to have created their own national pension fund ,under their own ownership and control. They could, then, have negotiated, through a co-ordinated campaign, of all Trade Unions, for a payment, from all employers, into this Pension Fund. I would not have had that payment in shares, but in cash for the simple reason that share issuance dilutes the share value, and thereby reduces the value of the shares owned by the pension fund. Moreover, having the payments in cash gives flexibility to the workers pension fund to buy shares in the companies it chooses. Such a scheme could not have been so easily dismantled, it places no reliance on the bourgeois state, and, should any employer refuse to pay in, they would be easily dealt with by a co-ordinated response, not just by the workers of the firm involved but by all workers.

Such a fund then opens the possibility, for the capital accumulated within it, to be directed to those co-operative enterprises referred to above. Is that fanciful? I don’t thinks so. For some considerable time now, on working class estates, throughout the country, the problems of individual debt have been addressed by the formation of Credit Unions. In addition to the Co-operative Bank, which is itself a large financial institution, there is the Unity Trust Bank set up by the unions. In fact, the TU European Fund was, for a long time, the best performing European Unit Trust, in the FT list of best performing funds. If all of the money, locked up in workers pension funds, even at this moment, were transferred to a single pension fund, under the democratic control of workers it would give, such a fund, tremendous financial muscle. If it were combined, with the existing resources of the Co-operative Bank and Insurance Services, and with a huge inflow, resulting from a large negotiated annual contribution, into this fund, by all employers, its muscle would be even greater. (See also why we should demand compensation for the land and means of production stolen from our forefathers not just as a means of raising a political campaign to demand financial compensation, but also to point out that expropriating the expropriators is nothing more than restitution of property - We Was Robbed

Such a shake-up would also have to change the nature of existing Co-operative organisations such as the Co-op Bank, and Co-operative stores. Their present status, as consumer co-operatives, controlled by time-serving bureaucrats, would have to go. They would need to be turned into workers co-operatives controlled by joint boards of workers from within them, and representatives of all workers whose pension fund financed them. But, such a change, would have other benefits too, not only challenging the dominance of finance by the commercial banks, and City Financial Institutions, but also challenging the domination of the retail trade by TESCO.

Finally, there are all those other aspects of workers lives which such a change could affect. For example, in place of ALMO’s or even Council Housing, workers could begin to buy up their estates, to be run as Housing Co-operatives, under their immediate control. They could use the resources, then at their disposal, to rejuvenate them, to finance alternatives to the police etc.

There is one other change that I think could strengthen the position of workers vis a vis capital. Marxists have always said that the problem faced by workers is that whilst they are forced to sell their labour power, and compete against each other driving down wages, Capital is limited in its supply, it forms an effective monopoly against labour. Increasingly, workers are being forced into temporary jobs. One of the biggest growth areas has been in the mushrooming of employment agencies, which hire out workers to fill these temporary positions. If workers resurrected the idea of “One Big Union”, this single union could act as a huge employment agency.
In effect, it would establish a monopoly, of the supply of labour, to match the monopoly supply of capital. If all employers could only hire workers, via a contract with this agency, the agency would have massive bargaining power in setting wage levels, and in demanding the kind of pension contributions referred to above. In order to ensure that workers sold their labour-power only through this agency it would be necessary that the Agency guaranteed payment at rates higher than workers currently enjoy. By mobilising the financial resources, of the pension funds, Credit Unions, Co-operative Bank and Insurance Services, the Unity Trust Bank, and the profits from any co-operative enterprises, such a possibility is not at all difficult.

During the 19th century, the Pottery unions, in Stoke used a similar tactic to great effect. They would each year set a rate to be achieved, and then focus their attention on the worst paying employers, to force them to bring up their rates. They would pull out key workers that could not be replaced, and as employment contracts were legally binding for 12 months, they would get laid off workers to sue the employers for breach of contract. Similar tactics have been employed, by unions, in the US, who focus their whole attention on key employers, putting all their resources into supporting workers in those firms, forcing up rates, which then all other employers are forced to adopt. Similar tactics are employed in Germany. One Big Union, acting as the sole supplier of labour, could employ this tactic far more successfully, and, given the financial backing of the workers pension funds, and other resources, could sustain strategic groups of workers indefinitely in such targeted disputes. It has a further benefit, it also gives, to workers, a sense of their shared interests and common goals. By building co-operative enterprises that have a chance of succeeding, enterprises that are organically linked each to one another, and to the whole of the working class, through the central financing function of the workers pension fund, workers begin to learn that they do not need bosses, that money and financial resources need not act as Capital against their interests, but can act under their control as a means of furthering those interests.

None of this is to say that workers should not also conduct a political struggle alongside it. There are plenty of things that require continued political struggle. For a start, it is clear that the bourgeoisie would find all kinds of legalistic reasons why such a monopoly of labour could not be allowed to interfere with the operation of a free market. A political struggle would be required to override such arguments. A political struggle would also be required to draw out the lessons of the things the workers had achieved would also be required, and, more fundamentally, the idea that the bosses would do everything, in their power, to reverse them, including, if necessary, abandoning the façade of bourgeois democracy, would need to be explained, and workers prepared to resist it. In short, the struggle to wrest control of capital, away from the capitalists, would need to be conducted not just on the basis of direct action by workers to secure it, but would require political action, to give it the necessary legal form, and would need to be carried forward, all the time, on the basis of explaining to workers that capitalists would try to undermine it, and would, ultimately, resort to violence to prevent their power being taken away, that, in the end, the gains, made by workers, could only be defended, against such attack, if they secured, for themselves, complete political control by smashing the apparatus of the capitalist state, and replacing it with a Workers State.

Workers and Inflation

On Friday Oil rose $10 a barrel or almost 10% in a single day, having risen sharply the previous day. All around the world food prices and other prices of basic goods bought by workers are soaring. According, to a report on the business channel CNBC the other day if prices in the US were measured in the same way they wee under Reagan inflation would be running at arund 12% a year. A similar figure was calculated for this country. Sme people are comparing the situation with the inflation of the 1970's. In fact the comparison is false. The inflation of the 1970's and 80's arose, because Capitalism had entered a Long Wave economic decline from the mid 1970's, which lasted until the end of the 90's. The inflation in the 70's was a result of pumping large amounts of liquidity into the economy at a time when goods were not being produced as their equivalent. Its what led to stagflation. Although, the major capitalist pwoers such as the US and UK, and Japan have continued over the last 20 years to pump huge amounts of liquidity into the system to prevent their economies going into deep recession prices remained low for most of that period because of vast quantities of commodities coming on to the market from China and other developing economies, and because large amounts of this liquidity went into inflating asset price bubbles such as in the Stock Market, and Property. But, this is not the 1970's. Despite all the doom and gloom on the new we are not entering an economic crisis. Rather we are at the beginning of a Long 20-30 year powerful boom. If you want an equivalent we are at the same kind of period as the mid 1950's. Then as now rapid economic growth, and the development of new dynamic economies (then Japan and Germany, now China, India, Brazil etc.) caused a huge increase in demand for basic resources and food pushing prices higher. Then as now a shortage of labour - particularly low paid labour for low stats, unskilled jobs - led to mass immigration to meet the requirements of Capitalism. Its not just Britain that has encouraged such migration, the US encourages migration form Mexico and Latin America to meet its need for cheap labour, and so do other European economies. It is this surge in demand outstripping the ability for supply to epxand fast enough that is the cause of this inflation, which is mopping up all of the excess liquidity pumped into the system over the last 20 years. Though oil is a special case due to the fact its running out, and we have probably hit world Peak Oil production i.e. we can't increase production from hereon in.

From a working class perspective this opens up great potential. For all the reasons that the last 25 years of economic downturn have weakened workers organisation and strength, the next 25 years of upturn will strengthen workers position. It always has in the past during such times. It will do so again.

I wrote this article a couple of years ago, and it has proven rather prophetic.

The world economy is booming. One of the largest investment firms in the world Bridgewater Associates has recently completely its regular analyses, which shows that for the first time since 1969, there is not one single economy in the world in recession. The IMF has just increased its forecast for world economic growth yet again. China where the Government has been trying to slow economic growth for fear of overheating has just put in economic growth yet again of over 10%, but that is put in the shade by the world’s fastest growing economies. Azerbaijan is forecast to grow by 26% this year, as is Angola as a result of the current high price of oil, Mauritania which does not have oil, but has gold and other raw materials is forecast to grow by 18%. I have given the background in this previous discussion - Kondratiev’s Long Wave Theory - but I want here to look at a more limited short term consequence.

Marx analysed Capital and noticed that it moved in cycles. Economists since have given a lot of thought to what causes these cycles. What comes out of Marx’s analysis is that these cycles are not like say those that cause sun spots. Natural cycles occur because of fairly fixed physical characteristics. Although economic and other social activity has some aspects, which are analogous it is the very fact of human intervention, which means that processes are mediated, and therefore less predictable. Moreover, within the realm of capitalist economic activity there is not just one economic cycle occurring, but several, each interrelated and affected by the other. So for example, at the beginning of the 19th century when the first such cycle was identified as occurring in 1825 this seem to coincide with the time when for the first time the real effects of the Industrial Revolution manifest itself. In the preceding period the groundwork for that was laid, in the preceding century many inventions are made for example spinning machines, the steam engine etc. but it is only at the beginning of the 19th century that these begin to play a major role, and in particular it is the introduction of the powerloom, and of steam power that has significant effects. Economic historians now believe that the extent of economic growth in the last third of the 18th century was considerably overstated, and that consequently economic growth earlier in the century understated, and this further illustrates the extent to which output rose in the first part of the 19th century.

The downturn in 1825, therefore, seems to be attributable to a classic overproduction, the fact that output grows so rapidly that it outstrips the market. In contrast to Say’s Law (which actually was not developed by Say) which say’s that unfettered markets automatically clear it was obvious that there came a point where goods could not be sold whatever the price. Orthodox economists would describe this in terms of diminishing marginal utility. At a certain point consumers have so much of a thing that they do not want any more of it, or no more of it at current prices, and for capitalists to sell it to them at a price they might (or might not) be tempted to buy it at, would mean that they would make a loss on the Capital they have already outlaid on producing those goods, or at least a diminished profit.
So here we have one form of cycle, one on which consumers simply reduce their consumption or slow down the rate of increase. Today capitalists try to avoid this by diversifaction of product ranges, advertising or marketing campaigns to boost flagging sales, and of course built in obsolescence as well as continually changing designs, models etc. and creating a need for new products, so that consumers throw away the old.

Alongside this cycle is another that which affects the capitalists own purchases of production goods. Marx seems to have believed this played a significant role in the periodicity of economic cycles. In particular he seems to have been interested in the work of others that had studied the extent to which, for example, a factory building would last, or that other long term productive capital such as machinery was depreciated over. Again orthodox economists include this today in their theories of crises. Say 10 number of firms replace 10% of their machines every year as they wear out, and each firm has 10 machines. Then the firm manufacturing these machines has a regular order each year for 10 machines. Now suppose that economic growth increases so that each firm now needs not only to buy a replacement machine, but to buy a new machine in order to increase output. A 10% increase in demand for each of these firms causing a 10% increase in its demand for machinery results in a 100% increase in demand for the machine manufacturer. Orthodox economists call this the “Accelerator Effect”, but combined with this is the “Multiplier Effect”. What this means is that the increase in demand for these Capital Goods then has a much bigger effect on the economy than simply this demand. The workers of the machine making company are doubled in size, the demand for materials by the company double, the profits of the company appropriated by the capitalist double perhaps too. All of these people receive incomes from this, which they go to spend, and in doing so they create a secondary effect of new demand for yet more products, and this too leads to more incomes and more spending. Calculated mathematically then if on average consumers spend 90% of their income, then, if say the initial increase in demand for new machines amounted to £1 million then a total of £10 million would be added to the economy. Of course, were the economy to go into reverse then the opposite is true. Each firm might decide that it does not need even to replace any machines if trade is slack, and then the machine manufacturer finds he has no business at all.
So a second cycle is set up depending upon the average length of time machines last. But this is more difficult. Not only are capitalists decisions on whether to buy new machines affected by them wearing out, but as seen above they also depend upon their perception of the state of demand for their products. Improving conditions might cause them to buy more, worsening conditions to buy none. There will tend then to arise a certain degree of synchronisity in these cycles because demand for machines will automatically ebb and flow with changes in the condition of the economy in general, and so capitalists will over time find that they all enter a renewal cycle for their machines around the same time. Another factor strengthens this synchronisity innovation. PC’s are a good example. Throughout, the 90’s there was a clear cycle of replacement for PC’s, and the reason was quite simple. Microsoft brought out a new version of its operating system every two years, and other software suppliers geared their products to it. In addition new chips were introduced on around the same frequency so that improved hardware enabled improved more demanding software to run, which in turn stimulated further hardware development etc. Businesses, geared their IT investment plans to this cycle of upgrades. The same is true of other types of machinery. But this also poses a further problem. A business that has recently bought a new milling machine might find itself having to junk it because a new invention makes it obsolete. If its competitors buy the new machine which is 50% more efficient, then they are forced to follow suit.

Thirdly, there is the credit cycle. The credit cycle goes through basically four different phases. At the beginning of an economic expansion the demand for credit rises because industrial capitalists need more money in order to expand their production, and the more they sell the more money they are outstanding until it is paid for. This increased demand for credit may not result in higher interest rates, though, because the increase in economic activity also results in more money entering circulation, and consequently an increase in money capital accumulated, particularly as in this early part of the expansion the first beneficiaries are likely to be capitalists who, using the inventions developed in the previous phase which increase productivity, as well as having access to a pool of available labour from the reserve army, see their profits rise significantly through both higher sales, and higher selling prices with constrained costs. In the second phase the demand for credit is reduced as the economic expansion slows, and a period of stability sets in. In the third phase economic slowdown begins. Consumers begin to reduce their purchases and begin to think about saving in case of future problems. Capitalists no longer see the need to buy more machines other than is required for replacements, and with input prices having risen as reserves of labour and materials were used up profits become squeezed. The demand for money and credit falls, resulting in lower interest rates. During this period capitalists may begin to look for more lucrative profits elsewhere such as in Stock Market speculation as cheap money makes this a more attractive proposition. Marx refers to this happening with the Railway Mania in the 19th century, but similar things happened during the 1920’s leading up to the Crash of 29, and the same thing happened in 2000. In the fourth phase economic activity begins to fall – and the diverting of financial resources from productive activity to speculation can be a cause of that. People begin to pay their bills later or default, firms desperate for sales offer extended credit terms etc. The demand for money and credit rises to finance this extension, and late payment causing interest rates to rise again briefly before collapsing as economic activity collapses.

In modern economies because the state intervenes heavily in the economy through monetary policy this credit cycle is modified. If the state considers that economic activity is declining it can artificially increase credit by reducing interest rates thereby encouraging consumers to reduce saving and increase consumption, and encouraging capitalist to increase investment. Similarly, as in the US, UK, and Europe at the moment, and shortly in Japan the State can increase interest rates to slow down economic expansion. But the extent to which this is effective depends. If the economy is on a serious downward, and deflationary spiral reducing interests rates may be ineffective. Keynes described it as like pushing on a string. If I’ve just lost my job I’m unlikely to be tempted by the many adverts telling me they will lend me money to buy a new car despite my economic position, CCJ’s and other bad credit record. If I’m a capitalist and can’t sell the warehouse full of stuff I’ve produced I’m not likely to borrow money to expand my production. Japan had interest rates at zero for a decade, but couldn’t get people to increase their consumption because with falling prices in the shops there was an incentive to keep your money in the bank, and buy what you needed later when it would be cheaper.
All of these cycles interact with one another giving the overall short term economic cycles observable under capitalism. A crises within capitalism can be sparked within any of these three areas, but as Marx points out the real source of the crisis is always located within the sphere of production, and stems from the separation within capitalism of production from consumption, a separation that exists under no other previous mode of production.

But as Kondratieff argues these short term cycles also play into a longer term cycle. That can be broken down as follows, I think. Rather like Marx’s argument about the length of time that factories last there is a similar argument in relation to raw materials. Mines and quarries tend to be rather large investments based around long pay back timescales. They are not like a Mars Bar plant where you can fairly quickly increase or reduce production. If you have invested several tens of million pounds in a new copper mine you expect it to keep producing at pretty much the same rate for the next 20 years or so, you can’t afford to have all that capital sitting being only partially employed so you keep producing, and if need be reduce the selling price, you hedge the future price against such falls through the commodity futures market etc. But for the same reason capitalists tend not to rush out and make such large investments of capital unless they believe that it is going to be profitable to do so. It takes 7 years to get a copper mine up and running, for example. So it is easy to see why a fairly long cycle should exist for such raw materials. What tends to happen is that a splurge of exploration happens when as now economic growth begins to accelerate, because this economic growth occurs at a time when all the existing mines and quarries have taken out all the easy stuff, their equipment has started to become a bit long in the tooth and out of date, and so not only can they not easily meet the increased demand, but doing so is expensive compared to a new mine with better reserves, and using more up to date equipment. But the exploration takes several years, and once found it then takes another 7 years before production begins. In the meantime, demand continues to increase as economic growth accelerates and raw material prices rise.

In the Kondratieff piece referred to earlier I argued that the world entered a new K upswing in 1999. I would point to the fact that everyday for the last year commodity prices have been hitting new all-time highs. Large increases in share prices are normally restricted to small companies that grow quickly, but in the last year some of the biggest companies in the world such as Rio Tinto, Anglo-American, BHP Billiton have seen their share price more or less double. It is these huge increases in commodity prices which is fuelling the economic growth of countries like Azerbaijan, Angola, and Mauritius referred to at the beginning. The same is true of many of the other countries rich in resources in Latin America, and the Caspian basin. Kazakhstan has been turned into almost a modern equivalent of the Californian gold rush as companies fall over themselves to start up oil production, gold and copper mines etc.

The second aspect is that during the down leg of the K cycle there is more incentive to develop new ideas. But rather like the exploration and development of new mines etc. such new ideas take time to formulate and develop. These new ideas get taken up as economic growth accelerates in the upswing both as new types of consumer products, and as new methods of production. So although the microchip was developed mainly during the 1980’s and 90’s as a baseline technology it is only in recent years that that technology has really begun to be adopted widely with PC’s being a consumable, the Internet developing as a new means of communication and basis for production and consumption, and the integration of these various technologies in mobile platforms etc. A similar explosion of biotechnology applications is also likely on the basis of the baseline technologies developed there. But these technologies have the opposite effect to that of raw materials. These new technologies enable a large increase in output at lower unit costs. In part this counteracts the increased costs of raw materials inputs.

Finally, there is labour. Over the period of the downswing Capital has more of the whip hand than it normally does. It has more reason to resist the demands of labour faced with falling rates of profit, and more severe, and more frequent recessions. In itself these press down on labour. So for example at the beginning of the downswing Capital and its state begins to press down more heavily on labour as happened in the Miners Strikes of the early 70’s, and the subsequent pay policies and public spending cuts through to Thatcher’s all out class war first against the steel workers then against the Miners. Once pushed back Capital then not only reduces the ability of Labour to fight back, but undermines its bargaining power, increases the reserve army not just in its permanent form, but through temporary and casual working etc. Wages and conditions are pushed back. As the economic expansion of the upswing begins this demoralised and weakened condition is not easily shaken off. Confidence has to be restored, organisation rebuilt, new leaders developed. It takes time, and with new more productive technology the demand for labour may not rise quickly, and may rise in new unorganised industries. Indeed each Kondratieff upswing has tended to see the emergence of a new economic powerhouse that challenges and replaces the former dominant economy – in the present case China appears to be fulfilling that role, and that may require the development of a whole new Labour Movement.

I think all of these elements can be identified in the present conjuncture, and that should give confidence to Marxists that once more the conditions are developing for militant working class struggles. How these struggles manifest themselves will differ. In China wages are rising by 10% plus per year, and there are clear signs that Chinese workers are beginning to become more organised. The same is true of workers in South Korea and other rapidly growing Asian economies. Under these conditions workers struggles are likely to take on increasingly an offensive nature. Yet in the US, the UK and Europe despite signs of economic growth it is anaemic compared to China and elsewhere. The reason is that these economies are hugely inefficient compared to China which combines the latest technology, with low wage labour. Consequently, we see Delphi declaring bankruptcy with GM looking to be not too far behind.

Delphi
GM

In Britain we see Peugeot closing Ryton etc. Britain and the US also have a problem with huge levels of public and private debt which has been run up as an alternative to their economies cratering during the downturn, but it now acts as a drag on recovery. As with the PCE in France, it is quite likely that workers struggles in these old economies are likely to have more of a defensive nature, but as the victory of the workers and students in France demonstrates, and following on from the victory against the neo-liberal EU Constitution, which no doubt also helped develop confidence for this current victory against neo-liberalism, there is an air of change beginning to sweep into the Labour Movement even in Europe. In the US too, the demonstrations against the regime’s attempts to bring in new Immigration Laws shows that within the lower depths things are beginning to stir.

Soon the nature of the struggles will noticeably change from being defensive to offensive struggles, and Marxists and Trade Union militants must be prepared to reorient to that situation, or there is a danger of being left behind the class. It will begin to manifest itself in another aspect of the Kondratieff cycle. During the last 20 years western governments have pumped huge amounts of liquidity into the economic system to reduce the effects of recession. As Marx points out when economies are growing rapidly they require increased amounts of money to be put in circulation in order to enable goods to circulate. When real money – gold – was used there was a self-correcting mechanism which threw out excess currency from circulation. But since economies have used fiat currencies in place of gold this mechanism no longer exists. Consequently, any increase in the amount of money tokens (paper money and coins) or credit over and above what is required for circulation leads to a devaluation of these tokens, and thereby inflation.

See: Gold and Money

This inflation has not been manifest because of two things. Firstly, the prices of consumer goods have been kept down because of imports from China, and other low cost producers which have sucked up a large amount of this excess liquidity, and is then recycled into Chinese Foreign reserves and loans back particularly to the US, hence the huge trade deficit of the US and UK. Secondly, the liquidity has gone into financial and other assets – in particular creating a house price bubble in the US and UK. However, there will come a point where the current economic expansion, having used up the readily available labour and other resources, and faced with demands from labour for wage increases, as the demand supply balance for labour tips more in favour of labour, will lead to pressure for higher prices. The Chinese Stalinists are already fearful of the imbalance between the cities and countryside, and are trying in the latest 5 year plan to direct resources to the country. One project is to drive a huge motorway through to Western China, both as a means of facilitating the transport of raw materials from Kazakhstan and other Central Asian countries, but also to stimulate economic development along its route into Central China. The rapidly rising living standards of Chinese workers are already fuelling a consumer boom, and increasingly the Stalinists will be forced to divert an increasing proportion of output to meet domestic consumer needs rather than the needs of western consumers. Combined with the likelihood in the next year or so of a revaluation of the Yuan the consequence is going to be a significant rise in consumer goods prices.

In short the next year or so is likely to see the return of inflation, and the current rise in the price of gold is a frontrunner of that. Inflation will make the current debates over pensions even more crucial because inflation quickly erodes the incomes of those on fixed earnings such as pensions. But inflation fulfils a special function for capitalism. It is the means by which it cons workers into falling real wages its means of achieving what Schumpeter and Mises euphemistically called “forced saving” i.e. the workers are forced to save by enabling the capitalist to make bigger profits.

Trotskyists developed the slogan “For a Sliding Scale of Wages” to respond to this kind of attack. It has been little used for the last 20 years or so both because workers have been too weak to enforce it, and because at least for the last decade or so inflation has been low. But during the 1970’s workers in Britain had a sliding scale of wages, ironically introduced by Ted Heath, and workers in Italy had the Scala Mobile for a long time, which protected them to some extent from inflation.
But its important also to understand the arguments behind the demand. The most obvious argument is that it sets out clearly a refusal of workers to pay for any aspects of the bosses system, and problems encountered by it. But during the inflation of the 1970’s and early 80’s there was another argument to be had. The argument that wages caused inflation. It is important for Marxists to nail that argument as completely wrong.

Marx sets out the argument in a pamphlet – “Wages, Price and Profit” in a polemic against Weston. Marx’s argument is straightforward, and one that can be argued even in the terms of orthodox economics. His more detailed explanation is given in the link above on Gold.

Marx says suppose that wages rise, what is the sequence of events that follows from this? The first thing is that workers have more money to spend, and so spend more on wage goods. This increased demand for wage goods might then cause a rise in their price. At the same time the capitalists employing these workers will in paying out more wages suffer a fall in profits so that they will have less money to spend. Because these capitalists have less money to spend their demand for luxury goods and capital goods will fall, which will cause the prices of these goods to fall also. But the higher prices of wage goods means that the producers of these goods will make higher profits, whilst the producers of luxury goods and capital goods will make lower profits because of their lower prices. Seeing this capitalists producing luxury goods and capital goods will switch production into the more profitable production of wage goods. The increase in the supply of wage goods will then reduce their prices, and the reduced supply of luxury goods and capital goods will increase their prices until such time is this adjustment brings about an equilibrium of supply and demand, and equal rates of profit in each of the three sectors.
Consequently, as Marx demonstrates an increase in wages does not cause inflation it merely causes a redistribution of value between workers and capitalists with a consequent reallocation of capital away from the production of the things capitalists spend their profits on, and towards the things workers spend their wages on.

It flows from this that if wage increases are not the cause of inflation then workers should not suffer as a result of inflation. It is necessary to ensure as a minimum that a sliding scale of wages is implemented so that any increase in prices calculated by committees of workers is automatically built into an increase in wages at the end of each month. Workers can then negotiate improvements in their pay over and above that as usual. But workers need also to demand such monthly indexation of pensions and benefits on behalf of those that cannot take action to ensure this themselves.

1905 - Reform and Revolution

In 1905 the workers, peasants and bourgeois revolted against Tsarism demanding a democratic assembly and land reform. Prince Michael of Russia, who the nobles were to try to place on the throne in 1917 came to stay at Keele Hall (now part of the University) just outside Newcastle under Lyme. Keele Hall was the home of the Sneyd Family, and during the early 19th century it was from here that the dragoons were sent down into Stoke to massacre local Chartists on the many occasions they were rioting, or liberating food from barges on the canal to be distributed amongst starving workers. Newcastle under Lyme itself had even earlier been an area of radicalism. One of the regicides that signed the death warrant of Charles I was Major General Thomas Harrison from Newcastle under Lyme. During the 19th century Stoke was one of the main centres of the Chartists Movement, drawing its strength from the then militant Pottery Union, as well as from the textile workers in the surrounding towns such as the silk workers in Leek. The atrocious conditions in the local industries are described by Marx in Vol I of Capital. It was fitting then that the TUC Congress of 1905 that was so important in relation to the establishment of the Labour Party was held here in Stoke.

The 38th Trades Union Congress opened at noon on Monday 4th September 1905 at the Victoria Hall, Hanley. James Sexton, President of the Congress observed that with the exception of the London Congress it was the largest ever organised. Herbert Emery, president of the North Staffordshire Trades and Labour Council said he had two motives for inviting the Congress to the area. Firstly, to show that the morality of the district was not as bad as had been portrayed, and secondly, to act as a stimulus to Trade Unionism in the area which was, “perhaps not so strong as it ought to be.” (Staffordshire Advertiser). He was right. The defeat of the Chartist Movement, which saw the deportation to Australia of many of its leaders in North Staffordshire, to Australia, also saw defeats for the local Trades Unions. The Pottery Union was involved in a very long dispute which ended in defeat. The union and its successors never recovered, to the extent that it was to never again organise any serious industry wide strike. Its resources went into other ventures such as establishing Emigration Societies, but later it was also to channel its resources into the Labour Party.

The North Staffs Trades and Labour Council was established in 1893 on the suggestion of Tom Mann. I am proud to say that for two years during the 1980’s I was its President. Soon after it was established it succeeded in obtaining the appointment of several old Trades Unionists as magistrates, and was particularly successful in promoting the representation of the working class on to local School Boards and Town Councils. By 1905, nearly all the districts unions were affiliated.
Mr. Richard Bell MP, seconding a motion thanking the Mayor and reception committee said there was a time when Trades Unions were not respectable enough to be welcomed by the Mayor, and he looked forward to the day when they would be respectable enough to be welcomed by the Lord Chancellor. The statement reflects the policy of the Trade Unions at the time of seeking respectability. It was this search for respectability which had sapped much of the strength that Trade Unions had built up in the preceding period. Moreover, along with the development of a layer of privileged workers (the labour aristocracy), the maintenance of relative prosperity, and a high degree of bourgeois democracy (after workers got the vote the extent to which bourgeois parties sought to incorporate them was Disraeli’s quite deliberate attempt to win workers votes, which created the basis of working class Tories), it led to the Trade Unions developing an upper layer – the bureaucracy – which formed into a definite social grouping balancing between the workers and the bosses.

The first day’s business finished with the delegates spending the afternoon at Trentham Hall, Park and Gardens. Trentham Gardens remained a favourite place for local workers to spend leisure time up to the present. It was the home of the Duchess of Sutherland who also gets a mention in Capital. Marx refers to the barbaric way in which she threw her clansmen of their land in Scotland in order to make way for sheep, and grouse shooting.

That evening the Independent Labour Party held a demonstration and meeting at the Temperance Hall, Hanley. The choice of the Temperance Hall was probably not accidental. One of the main influences in the development of Labourism was Methodism, and Methodism was very strong in the area. John Wesley held regular sermons up on Mow Cop the nearest thing to a mountain in North Staffordshire, and the last link of the Pennines. Mr. F. Hayward presided. On the platform were the Rev. A.F. Smith (Stoke), Mr. Bruce Glassier (Labour candidate for the Bordesley Division), Mr. John Hodge (Labour candidate for Gorton), Mr. R. Smillie (Labour candidate for Paisley), Mr. Pete Curran (Labour candidate for Jarrow), Mr. A. Sumner (Islington), and Miss Billington, organiser of the ILP.

As with all the political organisations of the working class at the time, there are few available records of the size, influence, and activities of the ILP in Stoke. At the time I was writing this history 30 years ago I contacted the ILP, SPGB (descendant of the SDF) and other organisations for any information they had but with little success. What information I have gathered is based on reports in local newspapers at the time, and archive material from Keele University library etc. If anyone has further information regarding the ILP, SDF in Stoke at this time I would be grateful.

Two miners had been elected to Parliament in 1874. The total of working class candidates elected became 3 in 1880, 11 in 1885, and 10 in 1886. But all of these sat with the Liberals and were known as Lib-Labs. In 1893 though the ILP was founded under the chairmanship of Keir Hardie. The ILP set out to build up a separate parliamentary Independent Labour Party. At the next election in 1895 the ILP had 28 candidates, but all of them including Hardie were defeated. The objective of the ILP was outlined during the meeting referred to above. The chairman of the meeting said he believed the ILP was the logical extension of Trades Unionism. The ILP believed that workers would not achieve the reforms they were seeking until they organised politically as well as industrially. The Liberals and Tories he said were simply two wings of the same party, the employing capitalist party. The capitalists interests were diametrically opposed to those of workers, he said, and they could not confer benefits on the workers without dispossessing themselves. Only the creation of socialism could end the evils which bedevilled the workers, he continued. A motion, proposed by John Hodge was carried which said,

“That the welfare of the country demands the substitution of an industrial commonwealth for the present competitive economic system, and that the reforms necessary to ensure this can best be obtained by the independent organisation and representation of the workers.”

Not a bad idea at all. Can you imagine Tony Blair or Gordon Brown voting for that.

The need for independent labour representation was a recurring theme in the meetings organised outside the Congress, and during the Congress’s own deliberations that week. This was no co-incidence. After its failure in 1895 the ILP recognised the need to gain the support of the Trade Unions. At the same time the unions reeling from the attacks being made on them by the ruling class became more aware of the need to extend the bargaining role into Parliament. The Taff vale Railway Company in South Wales had suffered loss by a strike, and in 1901 sued the Amalgamated Society of Railway Servants. The court decided that the union must pay large damages. The effect of the ruling was to put union funds in danger. The Tories anti union laws passed 80 years later put workers almost back to this situation, and of course Blair’s government has continued those laws.

In 1900 the Labour Representation Committee had been set up as a result of a meeting in London of the ILP, the Social Democratic Federation, the Fabians, and the Trade Unions. It acted as a loose federation seeking to promote the political organisation of the working class. After Taff Vale the process of welding this federation into an independent party of labour was speeded up. Thus unlike the European example of large social democratic parties with Marxist programmes setting up their own unions, the process was the exact opposite in Britain with a social democratic party being formed largely by the unions. Many of the Trade Union leaders, many of whom were Liberals, opposed the idea, believing they couyld obtain the reforms they required through the Liberal party. The effect of this was that unlike its European counterparts, which had Marxist programmes, the Labour Party emerged as a party whose ideas were a mixture of Liberalism and Fabianism. The only avowedly Marxist organisation which had taken part in the setting up of the LRC was the SDF, and it had split away in 1901. The Trade Union leaders insisted that no reference to socialism was to be included in the goals of the party.

Discussions with the other organisations in the LRC took up a lot of the TUC’s Parliamentary Committee’s time during the year before the 1905 Congress and its report, amounting to some 17 pages, was discussed on the second day. Opening the morning’s business the President, James Sexton, in his speech, gave a good summary of the issues the Congress would be concerned with that week.

“The fate of the Trades Disputes Bill throws a lurid light upon the boasted but absolutely fraudulent representative character of the House of Commons,” he said, “For can there be a greater satire than is represented by the fact that a measure of this character, carried by a substantial majority of 122 in the House itself was at the mercy of, and consequently destroyed by 21 members, most of them employers interested in the Committee stage of the Bill.”

The Trades Disputes Bill was introduced by the Liberals to reverse the decision in the Taff Vale judgement. In 1906 when the LRC became the Labour Party the election of that year brought 29 Labour MP’s to Parliament. Those MP’s were able to exert pressure on the Liberals, and the result was the Trades Disputes Act was passed. It prevented unions from being sued for losses during a dispute, and established the right to picket. The Act was basically emasculated 74 years later by the Tories in the Employment Act.

Sexton went on to discuss a number of other issues which are still important today. The fact they are still important issues today is perhaps an illustration of how the unions search for respectability which was extended into the reformist approach of the Labour party not only had the effect of sapping the strength of the movement, but also singularly failed in even securing its original limited objectives. These issues were the Conspiracy laws affecting Irish agricultural organisations, the Aliens Bill, the amendment of the Workmen’s Compensation Act, and the Unemployed Bill.

The Conspiracy laws were used against Des Warren and Ricky Tomlinson during the Building Workers Strike (see:Workers Fight Article by Cynthia Baldry 1973). The Conspiracy laws allow the police to imprison people including in this case members of the Labour Movement when they are unable to bring to court any evidence that a crime has been committed. In fact, as in the case of the Shrewsbury Two, you can be sent to prison for conspiring to do something which is not itself illegal. Since then the Prevention of Terrorism Act, and Blair’s new anti terror measures have introduced into the bosses armoury of weapons many more means by which to attack and suppress working class opposition.

The issue of compensation is one that concerned the Potteries particularly being an area where its workers suffered from pneumoconiosis in the pottery and mining industries. The pottery industry in particular has seen a long battle for the compensation of its workers whose lives are ruined as a result of this terrible disease. But it is an important point to note that after 100 years workers are still expected to be content with compensation for their lives being ruined, rather than the cause of their suffering being removed. In the case of asbestosis there was for years no prosecution of firms breaking the health regulations, and the workers were not even made aware of the danger they faced. As the recent fire in Hemel Hempstead and previous disasters such as Flixborough, Seveso, Three Mile Island, Chernobyl and many more incidents show the use of dangerous chemicals and nuclear power present if anything more of a threat to workers health and safety than ever before, not just at work, but in the workers communities that surround such plants. To make matters worse the Health and Safety at Work Act actually reduces workers rights by making them as well as the bosses responsible for their own and their workmates health and safety, often in cases where this is outside their control.

Speaking about the Aliens Bill, a measure to restrict immigration, Sexton said it was being used by the government as an “appeal to stupid blind prejudice” to gain votes at the next election. “It is claimed,” he said, “that this Bill will relieve sweated workpeople by prohibiting the introduction of cheap labour from other countries. The political dishonesty of the measure needs no other argument than the fact that while the promoters profess to shut out undesirables from the UK in order to help the British workman here, they rushed a measure through to introduce the most undesirable kind of cheap labour into South Africa.”

100 years on Sexton could give Blunkett or Charles Clarke, or John Reid or Jacqui Smith lessons on socialist principles.

Sexton went on to discuss the Unemployed Bill. If credit was due to anyone for its passing it was the TRUC for its constant pressure, he said. But he questioned whether any credit at all was due for what was after all a compromise “born of political expediency, and desperation.” He noted that a national register of unemployed would enable the capitalists to point to this over-abundance of labour on the market as an excuse for cutting wages. Sexton also noted that such a register could also enable the bosses to use it as a register of potential blacklegs during a dispute. This idea was developed by Tory James Prior, that the unemployed should work for their benefits, and also forma the basis of Blair’s various workfare schemes.

One policy pursued by the government back in 1905 supposedly to reduce unemployment was Protection, the use of Tariffs and quotas on foreign goods to reduce imports. This policy, Sexton said, was as unstable as when it was practised by Joseph in the land of the Pharaohs. “Protection,” he said, “will but bind our fetters closer and give the monopolist greater advantages than ever.” He argued that “Free trade could only be developed in the true sense of the word when the freedom of produce has been secured, not for the benefit of the few, but for the benefit of all mankind…”

At the time I was writing this back in the late 1970’s early 80’s it was obvious how far back the Labour Movement had gone in its ideas. The Communist Party and its fellow travellers within the Labour left had produced the Alternative Economic Strategy a thoroughly reactionary document which sought to develop British capitalism through an extension of state capitalism, and intervention by the capitalist state behind high protective tariff walls. It implicitly put the blame for the crisis of capitalism at the time on foreign workers or the Common Market stoking the fires of national chauvinism and racism. In 1905, however, the Labour Movement laid the blame right where it belonged, at the feet of the capitalist system, and argued as does Owen the socialist in Tressell’s “Ragged Trousered Philanthropists” that the answer is neither Free Trade nor Protection but the replacement of capitalism with socialism.
Sexton concluded this lengthy speech by dealing with the need for independent labour representation. He noted that workers were paying out £2 million a year to build up their unions but were having to vote for parties who were at the same time attempting to destroy the unions. (The more things change the more they remain the same). He noted the effect of the Taff Vale judgement on Trade Union organisation, and declared “independent labour representation is the only salvation of the Labour Movement.”The Political Committee’s report was taken next.

One issue raised in the discussion was the need for a Labour Movement paper.
In the afternoon, the Congress went on to discuss the motions on the agenda before it. These covered victimisation of trade unionists, hours of work in shops, lack of sufficient welfare provision for the blind. A motion was next carried unanimously calling for public bodies to be set up providing work fort he unemployed at fair wages, and for local authorities to be able to issue their own credit notes in order to escape the crippling interest charges on borrowed money.

The last discussion of the day welcomed the reduction in the consumption of alcohol and called for the trade to be brought under public control.

There was a meeting that evening in Burslem Town Hall in support of Trade Unionism and the candidature of Enoch Edwards as the Lib-Lab candidate for Hanley. Thomas Burt MP, Secretary to he Northumberland Miners Union, criticised the Government’s Aliens Bill. There was no other country than Britain, which had sent such a large number of its population to other countries, and no country in Europe with a smaller immigrant population, he said. And showing how little things have changed, he commented that the Aliens Bill would also be used against those seeking asylum. Enoch Edwards was a local man. He was General Secretary of the North Staffordshire Miners Association, and President of the Miners’ National Federation. In the election of 1906 he was elected as a Lib-Lab for Hanley. In 1900 he had contested the seat against the Tory MP A.H. Heath. At that election he lost by 642 votes. In 1906 the result was 9,183 for Edwards and 4,287 for Heath a majority of 4,896.

At another meeting that night held in Longton, and organised by the unions involved in the various branches of the pottery industry the chairman of the meeting said that Longton “was the black spot in local Trades Unionism, and as a result they saw in the china trade some of the masters taking advantage of the trade depression by invading prices and doing all they could to further enslave and tyrannise the workers.”

The annual conference of delegates to Congress representing trades in which women were employed also held its meeting on the Tuesday evening at the Grand Hotel in Hanley under the auspices of the Women’s Trade Union league. Mr. D. Shackleton MP presided, supported by Miss Tuckwell (President), and Mary Macarthur (Secretary), Constance Smith, Miss Bennett, Margaret Bondfield, and Miss Lindstrom (delegate from the Women’s Trade Union League America). There was also a meeting that night at the King edward’s Hall, Hanley under the auspices of the Amalgamated Society of Wood-cutters, the Cabinet makers, and the Furnishing Trades Unions.

At a meeting in the Masonic Hall, Hanley organised by the Council of Ruskin College Oxford, Robert Young explained that Ruskin was the first institution in the country to teach the economic and social questions from the point of view of the worker. A meeting of the Amalgamated Society of Tailors and Tailoresses was held at the Temperance Hall, Hanley with Mr. J. Morris (President of the hanley Branch) chairing, Mrs. Chew, organiser of the Women’s Trade Union league was the main speaker. Other meetings that night were organised by the Bakers and Bricklayers.

Motions discussed during Wednesday’s business at the Congress included condemnation of the Home secretary for refusing to abolish privileged cabs on the railways, against the need for character references from former employers, and for the nationalisation of railways, canals, mines and minerals. A motion proposed by Ben Tillet calling for an expansion of bodies for arbitration and conciliation was soundly defeated by 92,000 votes on a card vote. Mr. Harvey of the Miners Association, Chesterfield said, “the miner’s were not prepared to submit the bread and cheese and the lives of 800,000 workers in the mines to the will of two men. The resolution was the bolstering up of non-unionism.”

What a far cry from this explicit belief in the power of workers independent direct action and equally explicit rejection of class collaboration are the present union leaders, who place all their faith in bodies like ACAS, the legal skills of their teams of lawyers and fear direct action by their members.

Congress then went on to discuss a resolution setting out requirements for the extension of the Workmen’s Compensation Act.

In the afternoon session discussion was mainly devoted to a Free Trade resolution. John Ward of the navvies union, and Labour candidate for Stoke proposed the following resolution.

“That in the opinion of this Congress any departure from the principles of Free Trade would be detrimental to the interests of the working classes on whom the burdens of Protection would press most heavily, and injurious to the nation as a whole; that protective duties by increasing the cost of people’s necessaries are unjust in incidence and economically unsound, subsidising capital at the expense of labour; and that a system of preference or retaliation by creating cause for dispute with other countries would be a hindrance to international progress and peace.”
In his opinion “they would always have the poverty problem so long as there was a private ownership in land and capital.” (Applause).

Mr. Albert Stanley (Cannock Chase Miners) seconding the motion said that after the repeal of the Corn laws millions of loaves of bread had found their way into workers homes. Pete Curran (Gasworkers Association London) supporting the motion said, “What they wanted to do was to join hands with their comrades across the seas and instead of building up walls, they wanted to break down existing walls.” (Applause). The motion was carried with 1,253,000 for and only 26,000 against. The result was received with great acclamation.

On Wednesday evening there was a demonstration and meeting at Stoke Town Hall in support of the candidature of John ward for the Stoke seat. Ward was born in Andover in Hampshire and began work on a farm at the age of seven. Later he became a navvy working on the Andover to Marlborough Railway and the Manchester ship Canal. During his early teens he joined evening classes in the village of Weybridge conducted by a Mrs. Stock and her daughter Ellen, where he learnt to read. Reading he wrote later, “changed the whole course of my life.” In 1885 he enlisted for railway construction work with the British Army in the Sudan, for which he received the Queen’s Silver medal and the Khedive’s Bronze Star, medal and clasp. His experiences in the Sudan made him “anti war and anti many other things.” (Rev. of Revs 1906 p571), and a reading of Hyndman’s translation of Kropotkin’s “Appeal to the Young” helped to move his ideas towards acceptance of a radical reconstruction of society. Personal contact with Tom Mann and John Burns aided the process and he joined the Battersea Branch of the SDF. In 1886 he was chosen by the SDF to test the legality of a ban on unemployed demonstrations imposed by the Commissioner of London police.

In 1889 Ward became chairman of he SDF branch and in the same year established the Navvies, Bricklayers’ Labourers and general Labourers Union. After a series of strikes in West London, ward along with Jack Williams of the Gasworkers established the National federation of Labour Union. The history of the union is obscure but the Navvies Union continued though was never very effective. In 1906 the “Labour leader” described it as “simply a benevolent friendly society” in which the “working expenses” absorbed sixty per cent of the contributions of the membership.

In 1888 Ward stood as a candidate for the Central democratic Committee in the London School Board election along with Annie Bezant, Harry Quelch, and Amie Hicks. Only Annie Besant was elected though Ward polled over 8,000 votes. In March 1892 he stood and was defeated in the LCC elections. His failure led him into the Progressive camp. He was adopted as parliamentary candidate for Wandsworth in 1894 but did not contest the seat. Ward began to move increasingly towards Liberalism and by the end of the nineties had renounced his social democratic past. Moreover, ward was anti-semitic. At the 1900 TUC he had argued against the Boer war on the basis that it was being fought for control over the goldfields for cosmopolitans “most of whom had no patriotism and no country.”

As early as 1902 Ward began negotiations in Stoke and with the help of Richard Bell concluded arrangements with local Liberals despite the fact that the Navvies Union was affiliated to the LRC. In 1903 Ward with Bell, and W.C. Steadman refused to sign the LRC constitution and was removed from their lists. In 1906, therefore, Ward stood successfully as a Labour candidate but without the support of the LRC. Ward held the seat in 1910, and was returned unopposed as a coalition Liberal in the coupon election of 1918. In 1922 he was elected with a majority of 6163 as a National Liberal over the Labour candidate. He hung on to the seat in 1923 with a majority of 617, and with Conservative and Liberal support won as a Constitutionalist in 1924. In 1929 he was beaten by the Labour candidate, Lady Cynthia Mosley, first wife of the later fascist Oswald Mosley.

Despite his earlier anti war sentiments, at the outbreak of the First World War, Ward helped to recruit workers to be slaughtered. He helped recruit five Labour battalions, and was given first the rank of captain, and later that of lieutenant colonel. In the Summer of 1918 he went to Siberia as part of the interventionist forces trying to crush the Russian workers. Ward’s battalion was attached to the forces of the Tsarist, White Guard, General Kolchak.

Although in 1905 Ward had moved a long way from his SDF roots, the extent of his later betrayal was not so apparent. The meeting at Stoke Town hall was chaired by James Sexton. A resolution was passed from Mr. H. Leese.

"That this meeting is of the opinion that the further progress and welfare of this country will be better secured by an increase in the number of direct labour representatives in the British House of Commons.”

Ward quoted figures showing that the working class was producing great amounts of wealth whilst many of their number languished in workhouses, asylums, prisons, hospitals, and were forced to live in inadequate conditions, and sleep in barns and sheds.

Also on the Wednesday evening their was a meeting at the Temperance Hall, Hanley organised by the Hanley branch of the SDF. The main speakers were the Countess of Warwick and H.M. Hyndman (leader of the SDF and candidate for Burnley). Mr. T. Whittingham, one of the Labour councillors on Hanley town Council and a co-opted member of the Reception Committee, presided. He said that in the Sentinel (the local newspaper) the week before there was a statement that Socialism and Trade Unionism were antagonistic to each other. That was not true, he said, socialists always recommend workers to combine in Trade Unions, and at the same time they were anxious to bring about a social state in which trade unions would not be necessary.

A motion was moved by Mr. C.F. Davis,

“That this meeting of socialists and trade unionists appeals to its comrades throughout the British Empire, also those on the continent of Europe, and all over the world to use vigorously their great and growing influence to do away with all forms of secret diplomacy, and to bring about permanent peace among the peoples, seeing the social struggle against the capitalist class, in which they are universally engaged demands the continuous exercise of all their energies to overthrow the common enemy in all countries fort he purpose of replacing the anarchy and horror of competitive capitalism by the order and well being of the co-operative commonwealth.”

Mr. F. Knee seconded the resolution which was supported by the Countess of Warwick. She said that she was in no sense a speaker in the socialist movement, only a woker in the cause of children. Having been in Hanley a few days the cause of the children had been even more strengthened in her. “I cannot see,” she said, “how you parents can see the conditions under which the children in this district are living, and cannot pull yourselves together and create such a movement as the world will not withstand.” There was another reason why a socialist meeting should be held, namely that the great Parliament of labour was meeting within their midst, and the work being done there day by day to ameliorate the lot of the worker encouraged them to hope that the workers would feel how the power lay in their own hands to work out their own salvation. The resolution was adopted, and H.M. Hyndman then delivered a speech on “Trade Unionism, Internationalism and Foreign Policy.”

There is little information on the local SDF. It was formed in Silverdale (a village outside Newcastle under Lyme) in the 1890’s by Arthur Deakin. Fanny Deakin, Arthur’s sister, was also a member of the SDF, but she later joined the ILP when the SDF split. In 1917 she was elected to the Wolstanton and Stoke Board of Guardians. She was a leading figure in setting up the Labour Party in Silverdale in 1919. In 1921 she was elected as the Communist Party/Co-op candidate for Wolstanton and joined the CP in 1923.

The SDF was formed in 1894. It was an avowedly Marxist organisation and as with so many Marxist organisations since in Britain it was sectarian. It was the property of H.M. Hyndman who exercised control through ownership of the group’s printing press. The SDF suffered a number of splits, the first being in 1895. The next split led to the creation of the Socialist Labour Party. It was founded in America by Daniel De Leon and took up a dominant position in American socialism. The SLP was the closest thing top Bolshevism before the First World War. It gave a clear criticism of the Second International, pinpointing Adler’s weakness, the feebleness of the Second International, and gave a criticism of Parliamentarism, though it was in favour of parliamentary activity. Like the Bolsheviks the SLP argued for the importance of political organisation on the basis that the working class remained a slave class until it takes power. De Leon came up with the idea of organising in industry rather than in Trade Unions which could also act as organs of power. The SLP was more sectarian than the First International. It attempted to form unions where they did not exist. The method used in America against the AFL was transferred to Britain without taking account of the fact that in Britain unions already existed. The SLP had a great effect on the British Communist Party during the 1920’s.

The next split in the SDF occurred in 1905, and led to the formation of the Socialist Party of Great Britain. The SPGB is an extremely sectarian organisation which sees strikes for higher pay as a diversion from the task of replacing the wages system altogether. The SDF continued to exist and even to grow to some extent. IN 1907 it became the Social Democratic Party. With the growth of the Labour Party the SDP became the tail of the Liberal Party (a process I have referred to ealier in relation to John Ward). The SDP split once again and this time a fusion with the ILP led to the creation of the British Socialist Party which later became the Communist Party.

On Thursday the Congress took amendments to standing orders. A motion to have the president elected by Congress rather than the PC was defeated. Congress went on to discuss a motion condemning the Government’s Education policy, and calling for free state primary and secondary education compulsory until 16 or until such age as the University course begins, on the basis of equal opportunities, and where necessary the provision of means to allow capable students to go through University. The motion also condemned the use of exams for assessment, called for schools to be secular and administered directly by elected representatives of the people. The motion was carried with a minor amendment to the wording.

That evening a meeting of the National Amalgamated Union of Shop Assistants, Warehousemen, and Clerks was held at the YMCA Hall, Marsh Street, Hanley. Mr. H. Emery, President of the NST&LC, presided with the support of Lady warwick, over a well attended meeting. Mr. E. Burrows proposed that,

“This meeting of North Staffs shop workers affirms its entire confidence in organisation as being the only means whereby the conditions of employment in shops can be improved and maintained, and further, hereby calls upon all employees in the distributive trades to join the NAUSAWC and through it to combine with other workers in maintaining the solidarity of labour."

In urging the necessity of organisation he said they must remember that they were of the same army of labour as the navvy and the labourer. Lady Warwick supporting the motion said that, “with all the sympathy she had with their trade unions she would urge that it was so easy to go a step beyond and realise the power that lay in the hands of the workers of this country. If not for their own sakes, for the sake of their children. Socialism was quite easy if they would only consider it and think about it.”

Friday’s session of Congress opened with a motion on hours of work. Once again although unions have discussed this issue on almost every union Conference since little has been achieved, and rather than a reduction in working time, Blair now wants to make workers work even longer rather than retiring earlier, even though workers now work more intensively than they have ever done. The motion noted that with the present rapidity of production and the continuous introduction of labour saving equipment Congress should call for a maximum working day of 8 hours or 48 hours per week. The motion went on to condemn night working and called for the abolition of systematic overtime working. Mr. H. Emery of the Bakers supported the resolution saying that locally, bakers were working 80-90 hours per week.

Congress then went on to discuss a motion by Will Thorne on behalf of the London Gasworkers. On the physical deterioration of the working class. The motion, amongst other things, called for the provision of at least one free school meal every day, free medical advice and inspection for children, and for PT to become a necessary part of the school curriculum. The motion was carried.
A motion, proposed by C.F. Davis (Compositors, London) was then discussed. It pointed out the need for Local Authorities to provide decent housing for workers, and was carried unanimously. Congress went on to discuss conditions and wages in Government employment, the failure of Government departments to comply with the Fair wages resolution passed by the House of Commons in February 1891, the need for greater protection against injury in the pits, old age pensions, conditions in the postal service, the Workmen’s Compensation Act (the resolutions on which had been referred to committee earlier in the week), and a motion from John Ward condemning the Government for importing Chinese labour into South Africa, “to prevent it from becoming a white man’s country.”

A further meeting in support of Ward’s candidature was held on Friday night in Longton Town Hall with a crowded attendance. Cllr. H. Leese presided. The chairman said the Congress had one great objective, “namely, that the workers of the country instead of crying out for Empire should have better conditions under which to toil and live.” Whether this was a veiled attack on Ward’s position is not clear. He was pleased that there was already an awakening among workers for the need for independent labour representation. Mr. W.C. Steadman stated that the problems of low wages, long hours, poverty and high rents could be solved by only one class – the people directly suffering from these problems. He hoped that Stoke and Hanley would play their parts in returning the Labour candidates.

The last session of Congress was on Saturday morning when the only motion on the agenda was from the Shop Assistants calling for an end to the living in system whereby shop workers were paid partly in truck.

In the week before the Congress there had been a number of meetings. The first was on Saturday 2nd September. Held in the Victoria Hall, Hanley by the National Housing Reform Council. Mr. George Cadbury moved a resolution calling attention to the need to remove slum property and opposing the building of dreary block dwellings, and calling for future dwellings to be built on garden village lines. Again how far back have we gone with Prescott et al calling for workers to be crammed into so called affordable housing, which is another name for high density, low quality future slums to be built on brown field sites that would be better used to provide some open space to already congested and overcrowded areas. Cadbury went on to say that the most hopeful sign was that all over the world “labour was becoming more united, and before long men would refuse to lose their manhood and become mere machines to shoot down women and children at the will of a despot like the Tsar of Russia, or to slaughter their fellow workmen because they happened to live in another country.” The speech was extremely relevant to what was going on in Russia at the time where the first Revolution was getting under way, and unfortunately even more relevant to the developments just 9 years away where far from the sentiments expressed by Cadbury the leaders of labour throughout the world would line up their members to kill each other on a scale unprecedented in history for no other reason that they happened to live in another country.

The following day a meeting was organised by the Amalgamated Society of railway Servants at Stoke Town Hall. The attendance was only small but Sundays was the only day Railworkers didn’t work. A motion was passed calling for greater representation on public bodies and in Parliament. Cllr. H. Leese moving the resolution concluded by saying that he hoped that the holding of the Congress would instill more enthusiasm into local workers, “for he did not know any place in the kingdom that wanted waking up more.” Mr. Bell addressing the meeting said that he hoped the Congress would open the eyes of local workers “to the deplorable conditions into which they had dropped for want of organisation.”Another meeting that night at the Victoria Hall discussed “Education and National Physique”. The meeting was well attended. Will Thorne presided. Lady Warwick speaking for the SDF said in the Potteries where the physique of the people fell so lamentably below what ought to be the national standpoint it was necessary to set the task of building up better bodies for the workers in the next generation. She warned them that where there children were concerned not to be too timid in their demands.

The condition of workers in the Potteries was notoriously bad. Karl Marx in Capital quotes a Health Inspector’s Report on the District.

“Each successive generation of potters is more dwarfed and less robust than the preceding one.”

And another doctor says,

“Since he began to practice amongst the potters 25 years ago he had observed a marked degeneration especially shown in diminution of stature and breadth.”
According to Dr. Arledge, senior physician at the North Staffs Infirmary.
“The potters as a class both men and women represent a degenerated population both physically and morally. They are as a rule stunted in growth, ill shaped, and frequently ill-formed in the chest; they become prematurely old, and are certainly short lived; they are phlegmatic and bloodless, and exhibit their debility of constitution by obstinate attacks of dyspepsia, and disorders of the liver and kidneys and by rheumatism. But of all the diseases they are especially prone to chest disease, to pneumonia, phthisis, bronchitis and asthma. One form would appear peculiar to them and is known as potter’s asthma, or potter’s consumption. Scrofula attacking the glands or bones or other parts of the body, is a disease of two-thirds or more of the potters….That the degenerescence of the population of this district is not even greater than it is, is due to the constant recruiting from the adjacent country, and intermarriages with more healthy races.”(Children’s Employment Commission First report p24. Quoted in Karl marx Capital Vol. I p235 Lawrence and Wishart Ed. 1977)

John Ward and The LP

John Ward, one of the two Labour candidates elected from Stoke in 1906 was also one of the founding members of the Labour Party. On 16th February 1905 a Joint Conference between the TUC, LRC and GFTU took place at Caxton House. It established a Joint permanent co-ordinating committee with three joint secretaries from the three organisations, and became known as the Joint Board. At the TUC Congress held in Stoke that year the TUC had ratified the agreement reached in February and formally agreed to throw its weight behind the LRC which became the Labour Party. At the first Joint Board meeting on 29th November 1905 the representatives of each organisation were as follows.

From the TUC.

D.C, Cummings
D.J. Shackleton
J.J. Stevenson
W.C. Steadman

From the LRC

Keir Hardy
Ramsay McDonald
Arthur Henderson

From the GFTU

Pete Curran
Allan Gee
John Ward
I. Mitchell

When the debate took place, however, at the Stoke Congress it foreshadowed what was wrong with the political basis on which the Labour Party was established.

The debate took place on the second day of Congress. The TUC Parliamentary Committee had spent most of 1905 in meetings with the LRC, and its report amounted to 17 pages. A resolution was put by the Stevedores Union calling on the Parliamentary Committee to convene a conference of the TUC, GFTU, and LRC for the purpose of amalgamating into one body in order to be more powerful and effective. However, Ward's Builders Labourers' Union who seconded the motion had other motives. They voiced the opposition of a number of union leaders to having socialists on the Labour Representation Committee. They wanted unity in order to bring the LRC under the complete control of the TUC. The majority of delegates were satisfied with the agreement reached at Caxton House and rejected the motion.

That was the background to Ward refusing to sign the LRC Constitution.