Meeting the challenge

For an excellent report on and pictures of the Croydon May Day march and rally at Ruskin House last Saturday, you can do no better than see this report on the Sangha Kommune website. I was within earshot of the author of the report when he had his reported encounter with the passer by who, on seeing the hammer and sickle flag, declared that we were “forty years too late” and challenged us to provide an example of where communism had been successfully implemented.

There is not a lot one can do in such situations other than respond with confidence and good humour. This the comrade did with much skill and courtesy. Marches and street demos are not ideal situations for educating and persuading confrontational members of the public who have swallowed the anti-communist propaganda that permeates capitalist society. Of course, we could have pointed out that, without the attempt to build socialism in the USSR, we would have lost the Second World War and he and his family would not be around to challenge us. One could also point to the considerable achievements of Cuba where, by prioritising health and education, life for ordinary people is far better than it is for ordinary people in other developing countries. Finally, one could counsel caution about writing off too soon China’s attempt to build socialism. Of course China faces problems, but we should not let the distorted reporting in our mass media persuade us that China has given up on building socialism. China is taking its own, long term path, and we wish them well. As Marxists, it is, however, our critique of capitalism and our understanding that it is a historical phase that will eventually collapse under the weight of its own internal contradictions (and the shove we will give it at the right moment) that leads us to believe that we can and must build something better and more permanent before the capitalists destroy the world.

For a more comprehensive statement of the Case for Communism, try the CP pamphlet of the same name by John Foster, available from the CP shop for £2 plus 50 pence postage. He puts it much better than I can.

The Property Ladder

Walking around Croydon it’s obvious that there are a lot of home extensions being built by owner occupiers. This is hardly surprising. Homes are seen by owner occupiers as a form of saving – often their primary form – and a recent report by LSE Professor Paul Cheshire forecasts that house prices will double by 2030. This would represent a tax free return on investment of 4.6 per cent a year. It could be even higher: according to the Office of National Statistics house prices have grown on average by 8.75% per annum over the past 47 years. That is much higher than the return on bank deposits and comparable with long run returns on equity investment – especially so as tax is paid on interest, dividends and capital gains on shares but not on your primary home.

Many extensions have the effect of shifting what in many cases would be affordable homes for first time buyers into a more expensive category. They do, however, represent a great investment opportunity for owner occupiers already fortunate enough to be on the so called ‘property ladder’. Not only will the new investment increase in value in line with the original investment but there is also an immediate tax free capital gain to be enjoyed. As rule of thumb, it’s generally thought that £20,000 of building work, providing it’s not totally unsuitable, should add more than £50,000 in property value.

What’s going on here? There are a number of economic and socio-political forces at play. First, we need to ask what is the source of this exceptional high return to owner occupiers. The answer is straightforward: it is a transfer from those who don’t own homes to those who do. Many in the fortunate latter group think it’s an entitlement justified by their hard work paying off their mortgage and they have a right to pass it on to their kids. The fact that these kids may themselves be unable to get on the “property ladder”, or, on the other hand, may already be much better off than those without homes is overlooked. Also overlooked is the risk that predatory care home operators lie in wait for owner occupiers with every intention of appropriating the bulk of their investment. There is also the consideration that banks do very nicely in providing mortgage finance. Banks are essential to modern capitalism and, as the government’s austerity programme demonstrates, nothing must stand in the way of their profits.

Another interesting question is what is the source of the capital gain when an extension is built. According to neo-classical economic theory – the type they teach in universities, award Nobel Prizes for and regurgitate on the BBC and in the capitalist press – market should respond to eliminate all such predictable gains. They call this ‘arbitrage theory’. Marxist economist, on the other hand, recognise that building workers, like every other worker in productive industries, sell their labour for less than the value it creates. It’s this surplus value that accounts for the average capital gain on building extensions. If building workers were to received the full value of the labour power they sold to owner occupiers, on average there would be no capital gain from building extensions. But then if all workers could do this, capitalism would grind to a halt nd we would be forced to begin constructing a socialist society in which, initially, operate on the principle of from each according to their means to each according to their work*.

The underlying issue here is that, according to neo-classical economic theory, value is created when a commodity (including a house) is sold, or merely revalued in a market. Value is created out of thin air in the form of a “consumer surplus” because the seller and buyer have different subjective valuations. Marxist economists, on the other hand, take a more objective view. They consider that value cannot, on average, be created by exchange or shifting market prices. Exchange is a zero sum game – the buyer’s gain is the seller’s loss and vice versa. These are two fundamentally different ways of looking at how markets work in capitalist societies. It’s a theme we hope to explore when the Communist University in South London is relaunched shortly. Watch this space for news of this development.

* Only under a fully developed communist society would we attain the position of to each according to their need

TRUMBO

It’s very rare for any film to show communists in a sympathetic light. The excellent Trumbo, currently on general release, does this. It is an excellent film and is highly recommended.

The film recounts the life of Dalton Trumbo, a celebrated screenwriter and open communist who was forced to testify to the House Un-American Activities Committee (HUAC) about his membership of the Communist Party. Refusing to give evidence and to name fellow communists, he was jailed for 10 months and blacklisted. After release, he worked for peanuts without having his work credited while remaining loyal to his fellow communists and helping them too to survive. Almost hounded to destruction, he clings on and, in the end, his genius as a film writer is recognised and he is re-habilitated by winning an Oscar.

One scene particularly caught the attention. Aware of the anti-communist hostility mounting around the family, Trumbo’s daughter asks him, “Are you a communist?” to which he replies “Yes”. She continues “Is Mummy a communist?“ to which he replies “No”. Finally she asks “Am I a communist?” to which he responds with a question:

 

“If you see a fellow classmate at school who doesn’t have anything to eat, what do you do? Do you ignore him, or perhaps do you offer him a loan at 6% to buy some food?” She responds “I would share my lunch with him.” Trumbo smiles at her and says “Then you’re a communist”.

 

It’s very rare indeed for any film, especially a Hollywood film, to put the communist case so succinctly. Such a film can expect to attract plenty of criticism in the capitalist press. This film is no exception. According to the film critic in the Guardian, it “fails to challenge Trumbo’s unrepentant communism”. True: it celebrates it. Other critics have tried to undermine the film for technical reasons such as the supposed dominance and integrity of the central character, Dalton Trumbo. The despicable Economist magazine even tries to argue that Trumbo, while working twelve hours a day to survive by producing anonymous scripts for peanuts, was doing rather well out of his blacklisting. For them working people should apparently be grateful for whatever crumbs fall from the table of the rich and powerful.

The quality as well as the politics of this film are nevertheless undeniable. Bryan Cranston has been nominated for an Oscar for his portrayal of Dalton Trumbo and it’s well deserved. Ignore the negative comments and don’t miss this film.