‘Men have transformed the world with their knowledge. The short lean wheat has been made big and productive. Little sour apples have grown large and sweet, and that old grape that grew among the trees and fed the big birds has mothered a thousand varieties, red and black, green and pale pink, purple and yellow; and each variety with its own flavour.
‘The men who work in the experimental farms have made new fruits; nectarines and forty kinds of plums, walnuts with paper shells and always they work, selecting, grafting, changing, driving themselves, driving the earth to produce.
‘But men who graft the trees and make the seeds fertile and big can find no way to make the hungry eat their produce.
‘A million people hungry, needing the fruit – and kerosene spread over the golden mountains. And the smell of rot fills the country.
‘The people come with nets to fish for potatoes in the river, and the guards hold them back. They come in rattling cars to get the dumped oranges but the kerosene is sprayed. And they stand still and watch the potatoes flow by, listen to the screaming pigs being killed in a ditch and covered with quicklime, watch the mountains of oranges slop down to a putrefying ooze.
‘And in the eyes of the people there is a failure and in the eyes of the hungry there is a growing wrath.’
– John Steinbeck, The Grapes of Wrath.
RICH AND POWERFUL people are always explaining how they wish to expand their wealth and power not for themselves but for everyone else. Their basic claim for the ‘free-market’ system which has made them rich is that it is the only known system which fits what is produced to what people want and need.
Yet the plainest fact of all about a world dominated by the free market system demonstrates exactly the opposite. From every corner of the world comes the suffocated howl of millions of people whose desperate needs and wants are being systematically ignored.
‘The poor,’ Jesus Christ is reported as saying, ‘ye have always with you.’ We have them with us now in greater numbers than he or the Devil can ever have imagined. Thirty years ago the chairman of the Food and Agriculture Organisation of the United Nations warned that unless the ‘rich nations’ of the world substantially raised the proportion of their incomes in ‘aid’ to the ‘developing countries’, the chief beneficiaries would be the Four Horsemen of the Apocalypse.
The Four Horsemen – Famine, Disease, Ignorance and Death – have been riding roughshod over the world ever since. The World Bank estimated in 1988 that a billion people – one in five of the total world population – were living in ‘absolute poverty’ in conditions where the chief hope for any of them was survival beyond the age of five. The World Bank, as ever, underestimated the problem. A report on the decade of the 1980s from the Washington-based Worldwatch Institute put the figure at a higher 1.2 billion people, or 23.4 per cent of the world population.
In the 1980s, ‘the decade of the free market’, these numbers – and the proportion – rose for the first time for fifty years. In every previous decade since the end of the Second World War, the percentage of ‘absolute poor’ in the world had been marginally reduced. Now, in the decade of the system whose supreme quality is claimed to be the fitting of production to need, it has grown.
Most of the people in 43 countries (not including the two biggest countries on earth, China and India, where there were slight improvements) ended the 1980s worse off than at the start of the decade.
The chief casualties were children. In Peru, a third of all the children are stunted and deformed because they don’t get enough to eat. Child deaths from hunger in Zambia doubled in the first half of the 1980s. In Brazil, more babies died in infancy in the mid-1980s than at any other time – the first such increase for twenty years.
In a desperate attempt to drive home the full horror of what is going on, the United Nations Children’s Fund declared in its 1989 annual report:
At least half a million young children have died in the last twelve months as a result of the slowing down or the reversal of progress in the developing world.
Even this was wrong, because huge tracts of the ‘developing’ world are not developing any longer. As a direct result of the genius of the market system, enormous sums of money have been lent to poor countries at high rates of interest. In 1989, the so-called developing world owed more than a trillion dollars – a million million – nearly half the value of everything they produced.
If the people of Zambia paid everything they produced to the bankers and investment companies who have loaned their country money, it would still take them three full years to pay off the interest charges. If they did that, of course (which they cannot), none of them would exist. As it is, many hundreds of thousands will perish anyway, while the rest try to scratch some kind of survival from what was once one of the richest-endowed countries on earth.
Until 1984, the bankers lent more to the poor countries than they got back in interest. By 1988, the ‘return’ (a basic concept of the free market) was turning the flow in the other direction. That year the poor countries paid back $50 billion more than they borrowed.
The poor of the world are not found only in the non-developing countries, the poorer countries. There are large numbers of them in the richer countries too. They too are increasing as the market system – the one which claims it matches production to people – gets more successful. By 1988, in the United States of America, the land of the free market, there were 32 million people (including one-fifth of all American children) living below what the government itself said was the poverty line. In the great free market boom of 1980 to 1984, the real incomes of the poorest 40 per cent of the population fell by 3 per cent.
Between 1981 and 1987, the US federal government showed its commitment to the free market by cutting its spending on housing from eight billion dollars to three billion. Housing for the poor, which had to be subsidised, was cut from 20,000 units a year in the 1970s to 5,000 a year in the 1980s.
Prime minister Margaret Thatcher pursued exactly the same free-market policies in Britain, with exactly the same results. Perhaps the most astonishing feature of the great decade of the free market in Britain was the increase in the numbers of poor and homeless people. At the start of the decade, 6.1 million people were living on or below the level at which they were entitled to supplementary benefit. By 1985, this had grown to 9.4 million, and has been growing ever since.
As in the United States, Margaret Thatcher’s interpretation of the free market is that only people who can afford expensive housing really want or need houses. Under her guidance, councils have been almost completely prevented from building subsidised houses to rent. For the first time since the 1880s the streets of central London are filled with hungry, homeless people, begging for money for a meal and preferring to risk the elements rather than spend their pittance on an insanitary and dangerous dosshouse.
This astonishing increase in the starving millions, with all the indescribable wretchedness and hopelessness which goes with it, is the chief achievement of the free market in its Great Decade. Its supporters, led by the American president and the British prime minister, have from time to time harked back to that famous dictum of Christ: ‘the poor ye have always with you’. Jesus Christ, who, if he existed, was certainly poor, seemed to be saying that since there was not enough to go round, some people were bound to end up with next to nothing. Like so many of the remarks attributed to him, this one has been taken up by supporters of the free market everywhere to blame poverty on the poor themselves: on their own fecklessness and inability to ‘better themselves’.
All this disguises the central difference between the poor at the time that Jesus Christ was said to be living, and the poor today. It was true two thousand years ago that there wasn’t enough to go round, so some people were bound to be poor. In 1990, however, there is enough to go round; more than enough to go round. To adapt another of Christ’s phrases, it is the triumph of the market system that although the world is full of plenty, the market ensures that it is distributed among them that hath, and withheld from them that hath not.
A billion and a quarter people cannot get enough to eat. Yet there is, easily, the capacity to produce enough food to feed the world’s population twice over. There is enough food actually produced today to feed everyone on earth. Edgar Owens, of the United States Agency for International Development, told a conference in November 1974:
If the arable land of our planet was cultivated as efficiently as farms in Holland, the planet would feed 67 billion people, seventeen times as many people as are now alive.
That might be rather excessive, so, to give a better and more practical picture, here is the Food and Agriculture Organisation (FAO) of the United Nations, in 1976:
There would be no difficulty whatever with the existing knowledge and resources in doubling food production.
Another United Nations organisation calculated that 0.5 per cent of world spending on weapons of destruction, often mass destruction, would be enough to provide the investment in agriculture in the stricken continent of Africa sufficient to produce enough food easily to feed the entire African population. 0.5 per cent! A tiny fragment of the money devoted to killing could save the lives of millions and millions of people! Yet the ‘free market’ keeps it firmly locked up in bombs and bullets. At the same time it has ruthlessly cut production in the fertile farmlands of the United States of America. It has even launched a campaign to cut off funds from the United Nations agencies which have the effrontery to reveal the full horror of free-market priorities.
Everywhere, the discrepancy gapes so wide that even the blindest believer in the free market cannot avoid it. The human race now has at its disposal more than enough technology, raw materials, knowledge and imagination to fulfil everyone’s basic needs without difficulty. As the man from the FAO said, there would be ‘no problem’ in doubling food production, no problem for that matter in providing the people of the world with food, clothing, shelter, heat and light, not to mention education, health, and transport.
The figures for potential production are there in all the statistics. All human beings could be progressing in comfort and plenty, cooperating internationally to safeguard future generations from war, and diverting the war-making machines which have been handed down to us by the free market into building a safe and comfortable world. There is no need whatever for the poor to be with us now, let alone always. A flick on the tiller of the industries and farms of the world could wipe out poverty forever.
None of this is idealistic illusion. It is simple common sense, based on the statistics of what is now produced.
How is it, then, that our free marketeers insist on policies which condemn such enormous numbers of human beings to ruin?
The answer has its roots in the other major social development of the 1980s: the enrichment of the rich. This has been so stupendous as to defy statistics. In all the countries of the world, including the poor countries, the rich have been enjoying the greatest bonanza ever. The top 10 per cent of incomes in the United States of America, already far, far ahead of the rest of the population, increased their share of the wealth by another 7 per cent. In Britain the value of shares on the stock exchange multiplied five times between 1983 and 1987, and even the stock exchange crash of 1987 did not stop the fantastic accumulation of riches for the already super-rich.
Old-fashioned ideas, especially in publicly owned state industries, that the chairmen and managing directors should keep their earnings down as an example to their workers, vanished. As the public utilities in Britain were turned, ‘in the interests of competition’, from public monopolies to private monopolies, the chairmen and directors rewarded themselves for what they assessed as their ‘true worth’ – and promptly doubled and tripled their salaries. Enormous fortunes were flaunted by the millionaires’ press. At the start of the decade there were only a handful of billionaires in the world: at the end there were 157. Millionaires increased four times – from half a million to two million.
Tax-cutting everywhere aided the process. The highest rate of income tax in Britain was cut from 83 per cent at the start of the decade to 40 per cent at the end. With this went cuts in all the taxes which affected the rich: corporation tax, capital gains tax, inheritance tax. The poll tax, in abolishing property rates, put further millions into the pockets of the already rich.
David Stockman, who had been brought in by US president Reagan to organise the tax-cutting spree, became himself disgusted. ‘Do you realise the greed that came to the forefront?’ he wrote to a friend. ‘The hogs were really feeding. The greed level, the level of opportunism, just got out of control.’ A film called Wall Street, whose purpose was to demonstrate how vile and vulgar were the rich when compared with working people, was greeted with wide acclaim, and even applause. The slogan of the hero in the film, based on a standard Wall Street marauder, was ‘Greed is Good’. It was adopted by governments, stock exchanges and bourses, and wherever else people gathered to make money out of someone else’s effort.
The enrichment of the rich led to comparisons which were noticed even by the most liberal institutes. The Worldwatch Institute report on the decade set out to make ‘practical proposals’ for helping the poor:
Americans spend five billion dollars each year on special diets to lower their calorie consumption, while 400 million people around the world are so undernourished that their bodies and minds are deteriorating. As water from a single spring in France is bottled and shipped to the prosperous around the globe, nearly two billion people drink and bathe in water contaminated with deadly parasites and pathogens.
Since the rich own almost all the newspapers and control almost all the television stations, these ugly comparisons are seldom made.
On the rare occasions when the rich are called to account, they accuse their accusers of jealousy. They claim two major justifications for their wealth. The first is that ability and enterprise has to be rewarded. The rich, they say, are rich because of their contribution to society, which is exceptional and therefore deserves to be rewarded exceptionally.
Most rich people, however, are rich through no ability of their own. A recent survey of wealth in Britain found that the greatest amount of wealth is still owned by people who have inherited it. In other words, they are rich because their fathers, grandfathers or ancestors, with a great spurt of initiative and enterprise, died; leaving all their wealth – which was almost certainly acquired by some form of privilege or plunder – to their children, grandchildren and so on for evermore.
A lot of very rich people have no recognisable ability – with inherited wealth you don’t need ability. Many are rich precisely because they have no sensitivity or intellectual depth: they can read a financial balance sheet while ignoring the human exploitation that the profit figures represent. Such a man, for instance, was Roy Thomson, who became boss of one of the world’s greatest paper and publishing chains. Howard Hughes was another from the same mould. He started life as a playboy and ended it as a lunatic. He designed a plane which crashed and made a film which no one went to see. Because of an ability to be at the right place at the right time, and to read a balance sheet, he became head of a vast financial and industrial empire, and was able to nominate the president of the United States.
The new millionaires who emerged in the 1980s, almost to a man, are people without any noticeable skill, intellect or ability. They are expert only at playing the stock market or sacking workers – the two activities most likely to make a fast million.
The second justification for vast riches has been used by the high and mighty throughout history. It is that the wealth of rich men rubs off on poor people too. This argument is also taken from the bible, which tells the story of a beggar who sat at the foot of the rich man’s table so that he could catch the crumbs which fell from it. The sophisticated argument of the rich man was that if there were no rich man, there would be no crumbs.
Slightly embarrassed by the ‘crumbs’ metaphor, the rich today have invented a new, just as disgusting, notion to justify their riches. They call it the ‘trickle down’ theory. The richer the rich, it is argued, the more will ‘trickle down’ to the poor. No one can explain exactly how this trickling down works – and the facts of the past ten years prove the opposite. While the rich have gorged themselves, as we have seen, the poor have got poorer.
Indeed, the pattern throughout the whole of this century is exactly the opposite of what the rich pretend. The richer the rich have got, the poorer the poor have become. When the rich get their own way, as they did in the 1980s, the poor get less – not just in money but in all the other things which hold out some hope: free health, free schools, free recreation facilities, social security payments – and so on.
This pattern brings us to two simple truths about the world we live in: exploitation and class. The rich are rich not because of their ability, or because they allow so much to ‘trickle down’, or for any other reason save that they have robbed other people’s labour.
There would be no wealth at all if no one worked. Labour is essential to everything that is produced. The rich have got rich because they have swiped a proportion of the value of the workers’ labour, and because they use that surplus for one purpose only: to increase their own wealth, power and privilege.
This exploitation of labour, by a class of people who have grown rich because of it, is as central a characteristic of society today as it ever was. The ‘market’ is the economic mechanism by which this system works. It claims to be able to identify what is wanted or needed, and then to produce it. It claims an ‘economic discipline’ which only produces where a profit can be made. If something makes a profit, it is selling and therefore it is needed. If it doesn’t make a profit, it isn’t needed or wanted and therefore shouldn’t be made.
You may of course need something very badly, but not have the money to buy it – in which case you don’t count in the market. Millions of starving people are in this predicament.
The market is driven not by reason or need, but by irrationality and greed. In each new burst of investment workers are taken on, and there is a short boom. When the investment is over, workers are laid off and more goods come on the market at prices they can’t afford. So there is a slump.
This switchback ride from boom to slump has been going on ever since the beginning of capitalism. For thirty years after the Second World War, capitalists started slapping each other on the backs and telling themselves they had overcome the tendency of their system to crisis. But since the mid-1970s the crises have returned with a vengeance.
Marx described the market system as a mixture of despotism and anarchy. The anarchy can be seen all over the world today. Vast investment programmes during booms are suddenly scrapped in slump, and whole communities are wrecked in the process. In the early 1970s the British steel industry invested for an annual production target of 30 million tons of steel. Whole new plants and factories were built for the purpose – only to be scrapped when the production targets were ‘scaled down’ (thanks to the market system) to 16 million and then 10 million tons.
In 1972 a vast new investment programme was started to set the British coal industry ‘on its feet again’. New washeries were built and pits renovated. Then came the 1980s, and the prospect of cheaper coal from places where the workers were more poorly paid – South Africa, for instance, or Poland – and the same industry closed nearly 100 pits and sacked two-thirds of the miners.
No one knows what will happen next, who will suffer next. Capitalism is blind to the future. Its forecasters and experts had no idea, for instance, that a stock exchange crash was coming in October 1987. Fortune magazine had commissioned a special feature on The End of Socialism, which had to be tactfully postponed when the crash took everyone by surprise. Milton Friedman, the arch-apostle of the market, confessed after the crash:
Nobody knows what causes these panics. The causes are psychological and no one understands them. I don’t know what caused the Great Tulip Bubble, nor last week’s panic.
Since the central drive of the market is to enrich the rich at others’ expense, its madness and megalomania rivals that of any gang of rulers in all history. President Houphouet-Boigny of the Ivory Coast, one of the poorest countries on earth, recently built an air-conditioned Catholic cathedral which is bigger even than St Peter’s in Rome. The stained glass (nine acres of it) came from France and the marble was the most expensive in the world – from Italy. The cathedral cost 200 million dollars, more than any major investment ever made in that desperately poor country – where, incidentally, only a tenth of the population is Roman Catholic. ‘The market’ operates in the Ivory Coast – yet who can say that the Catholic cathedral there is any less monstrous than Ceausescu’s palace in Romania, where state capitalism was the ruling system?
At any rate, one madness leads to another. In 1980, another desperately poor African country, Sierra Leone, forked out two-thirds of its entire annual budget on pomp and circumstance for the Organisation of African Unity summit meeting.
The despotism is even more obvious than the anarchy. The wealthiest companies in the market are every day merging themselves into vaster and vaster multinational corporations. Most of these multinationals have more wealth and power than most of the countries in the world. They are organised hierarchically – from the top downwards. Everyone looks for inspiration to the top. The structure of a multinational company in the market system is every bit as much a ‘command structure’ as were the old governments of Eastern Europe. The Tariff Commission as early as 1973 saw what was happening:
In the largest and most sophisticated multinational corporations, planning and subsequent monitoring of plan fulfilment have reached a scope and level of detail that, ironically, resembles more than superficially the national planning procedures of Communist countries.
Ironically indeed. The so-called Communist governments operated by command, promotion and fear. So do the multinationals. They have not the slightest interest or concern about anything except the profitability and success of their company. They proceed in the name of the market to exploit the world’s natural resources without thought for the future, to root up the rain forests and poison the world’s atmosphere. They have not the slightest concern for the social implications of what they do. They constantly cut safety corners, endangering their customers and the public at large.
The Boeing aircraft disaster on the M1 motorway in 1988, the fire at Kings Cross tube station in London, the capsize of the ferry so appropriately called The Herald of Free Enterprise – all these and many other disasters were the direct result of the capitalists’ putting profit first and their consequent perennial contempt for the vast mass of human beings.
The period of economic crisis which began 20 years ago is by far the worst which capitalism has encountered since the Great Depression and mass poverty of the 1930s. In the 1980s, there was a burst of capitalist confidence and an effective surrender by many of its opponents. As the decade drew to a close, however, and as the real truth about the market system was brought home to employed workers (as well as to the unemployed and homeless who felt it first and keenest), the revolt against it began to spread.
In 1990, Margaret Thatcher’s British miracle looks pitiful. She had one policy and one policy alone to deal with the economic crisis: old-fashioned recession, and mass unemployment. She used this to the full when she first came to office in 1979. Many predicted she would never get away with it, but she had strong support from the true supporters of the market system. Sir Keith Joseph, her economic guru, told his chauffeur: ‘We’re hoping for three million unemployed, perhaps four.’ They got their unemployed, and so by the oldest device known to capitalism ‘squeezed inflation out of the system’. The recession passed, a small investment boom started, and once again wages and prices began to rise.
Confronted with rising inflation once again, Margaret Thatcher and her colleagues reach once more for the same old button. Each month they look longingly at the figures, praying for higher unemployment, another recession and a chance to squeeze inflation out of the system in time to recover before the next general election.
Even if she does not win that election, Margaret Thatcher’s government has served her class well. She has given them telephones, electricity, gas and water to make profits out of. She has ended the slender democracy whereby Labour-controlled local councils could raise rates on properly and provide services for the poor. She boasts of ‘enormously increased productivity’, which means of course that the workers have worked harder to produce more wealth, and the beneficiaries – as always – have been their employers.
The triumph of market capitalism in Britain was celebrated at the employers’ CBI conference in 1990, when speaker after speaker went to the rostrum to plead for lower wages. Rises of 9 per cent (with inflation running at 9.4 per cent) were, they declared unanimously, intolerable. On the last day of the conference the average pay rise for British directors was announced. It was 33 per cent.
At the end of the decade, the market system represented by Thatcher, Reagan and their multinationals finally made it into the heartland of the former Communist bloc in Eastern Europe: Poland. The legal correspondent of the Financial Times went there to see what had happened. He reported, suitably enough, on 1 May:
For the first-time visitor to Warsaw it comes as a bit of a shock – not the large number of spanking new Mercedes cars (though it takes a little while to adjust to that), not Stalin’s Palace of Culture, which rises above the city’s commercial centre like an overblown wedding cake, but the shops. They are full of goods. What has happened to the long queues and empty shelves about which we have read so much? They have gone, it seems – the inevitable consequence of the Polish government’s drive towards a free market economy.
The lifting of price controls and cuts in state subsidies to industry have cut the purchasing power of Polish wages by a third since January. Prices have risen so fast that the average Pole can no longer afford to buy.
For the Polish workers the long dark night of a state-capitalist system, where there was nothing in the shops for money to buy, had ended in the long dark dawn of free enterprise, where there was plenty in the shops, but no money to buy it. They and all the other working people of the world must be wondering if there is an alternative.
Last updated on 5.2.2005