More Socialism for Skeptics

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This and other essays on socialism by Clara Fraser are collected in the pamphlet “Socialism for Skeptics”, available from Red Letter Press.

In my last column, I inaugurated a kind of socialist catechism. A friendly reader transmitted the column via computer network and received some fascinating responses.

A man in Finland requested an FS subscription. A woman in California is distributing the column to a group which is producing an “FAQ” (Frequently Asked Questions) paper on socialism. A Missourian posted my words on another computerized bulletin board.

Another man hated it. He professed amazement at hearing from an open socialist—a dying breed, he said—and accused me of stacking the deck with lame questions leading to blah answers. Ouch!

His argument, condensed: “No group can know enough to centrally plan a modern economy. Capitalism isn’t directed by some sinister cabal, but by millions of individual owners. The whole system is coordinated through trade and the money prices that trade generates.”

OK, Mr. Free-Market Champion, let me respond to your critique.

FMC: Modern economy is too complex to plan.

Me: Stop with the mystifying and mystiquing already! With a little work, study and experience, anyone who can manage their own household economy can supervise the flow of money through a business, an entire industry, a government, banking, the stock market, and the compulsive flight of capital around the world.

Capital is simply money and commodities assigned to create a profit and be reinvested. Profit is made by the “magical” addition of surplus value to the value inherent in the product. The “added value,” the profit, is produced by workers.

And this capital is born to expand or die. To be useful, the investment must result not only in a profit but in a growing rate of profit.

The outcome of capitalism is hardly the dramatic and sexy individual entrepreneurship extolled by the financial and journalistic gurus. No, the real end product is world domi­nation (cartels, multi-nationals, international agreements) by a few huge conglomerates who each control a segment of the global market: imperialism.

The Zapatistas in Mexico today, the Chinese coolies under Chiang Kai-shek, the peasants and workers in Czarist Russia, the Black South African workers and farmers—all were smart enough to understand the private-profit system and what the hell it was doing to them.

You, too, my critic, should be sufficiently intelligent to grasp the nature and laws of the system you consider incomprehensible. Said Lenin, “Every ruler shall learn to cook and every cook shall learn to rule the state.” Can you cook? Then there’s hope for you.

FMC: Market relations aren’t plotted by a group of secret schemers.
Me: So who said they were? Much engineering and manipulation and control through pacts does go on, but for the most part, you’re right. It was Marx who pointed out the truly anarchistic nature of modern industrial capitalism—an irrational, disorganized hodgepodge operation that enormously rewards price fixers, crooks, gangsters, exploiters, con artists, gamblers, stock manipulators, and all manner of corruption. It’s a crazy and ruthless economy that survives by inflicting anguish on untold billions.

So why has this stupid, hideous arrangement not been extinguished? Because sinister cabals, whose existence you dispute, use their vast power to employ violence beyond imagination against workers and whole countries, so that their investments are protected and sealed off from the very labor that produced the profit.

True, market prices and successes can’t be totally plotted, but the underlying profit system is perpetuated by mostly unknown industrialists and financiers, and the governments they own.

FMC: The system is regulated through trade and the prices set by trade.

Me: You’re confusing the system and the market. The market is coordinated by trade (what sells and what doesn’t), but the private profit system is perpetuated by those with power and guns.

Furthermore, “trade” doesn’t determine basic prices anyway. Rather than being basically dependent upon supply and demand, prices in the marketplace actually fluctuate around the real value inherent in a commodity.

The value of a commodity comes from the labor invested in it, including the labor that manufactured the machinery and extracted the raw materials used to create the item. And the boss’s profits do not come from his smarts or his capital investment or his mark-up, but from the value created by labor—specifically, surplus-value.

Surplus value derives from unpaid wages. The worker is never paid for the value of the product, only for the value of her or his labor time, which is considerably less, and which meanders widely depending upon the historical, cultural and social conditions of a country.

Labor-power is miraculous, like the Virgin Birth. You get more out of it than you put in. Workers produce a commodity which has more value than what they get in wages to keep them functioning. This differential is surplus value, which is the source of capital.

You referred me to Rules and Order by Hayek. I’m not impressed. May I refer you to Wage-Labor and Capital and Value, Price and Profit by Marx, and to “What is Economics” by Rosa Luxemburg. Someday you may even be ready for Capital!

The secret of value, the labor theory of value, that was unearthed by the classical economists and by Marx is what the money barons fear and hate. It is the secret that will set the world free. People will learn how to control the supposedly sacred, eternal, inscrutable method of production and distribution that now controls us.

Socialists will produce for use according to a reasonable plan and without a thought for the odious notion of profit. And with no insatiable parasitic class to maintain, socialist society will produce abundance for all.

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