John Maclean, Justice December 1910

The ‘Maximum’[1]

Source: Letter, Justice, 17 December 1910, p. 10;
Transcribed: by Ted Crawford.

DEAR COMRADE, – My “crude” handling of the Marxian theory of value was due to space limitation – the same cause which makes some of comrade Bax’s writings sketchy – and also a desire to be clear through the elimination of non-essential adjustments – non-essential in the sense that their absence in no way vitiates the truths sought.

In studying the laws of motion, we keep out friction till its consideration is necessary; in studying capitalism we proceed from commodities to surplus-value in general, and then to the distribution of surplus-value.

The price modifications that result from variations in the organic composition as capital, temporary operations of the law of supply and demand, etc., in no way affect the general conclusion that prices are determined by the value of goods and gold, and not by wages. Therefore, it was needless of me to drag these in. I can allay friend Bax’s fears by pointing out that my students get a better training in prices than most students in the country.

Bax attributes increase in prices, so far as gold comes in, to increase of sources – to increased supply. So say capitalist economists; not so Marxists. South African gold is being obtained in less time than previous outputs; hence, lower cost, larger profits, greater influx of capital, bigger supply. In South Africa, in 1898, it took 25s 1/2d to crush a ton of ore and extract gold; in 1908 the cost fell to 17s. 6d., and, in some cases, to 12s. 6d. New mines could then be opened. Reduced value thus leads to greater supply and increased prices.

Now as to the law of “Maximum.” When I wrote my letter I was aware of its application during the French Revolution, under highly abnormal circumstances we all must admit. The Government of the Revolution issued inconvertible notes, called assignats, to run its show in spite of lack of hard cash. Over issue led to a 4 note at last exchanging for 3d. and even less. Prices naturally rose tremendously. Add to this the extra rise of prices in Paris due to the revolution. The result was that factories all over France closed down, in spite of tariffs imposed to exclude foreign imports; unemployment and starvation prevailed, particularly in Paris. Naturally, the Mountain, representing the workers, forced from the Government the Law of Maximum to compel a reduction in the price of bread and, afterwards, other necessaries. Nicholson, in his “Money and Monetary Problems,” points out that the Law failed to make assignats exchange at their face value and prices fall to their normal. Even admitting that whilst the revolutionists were in power it worked effectively, we know that the reaction swept it away. Sufficient has been written, however, to show the exceptional circumstances that brought forth the “Maximum.”

But all that Mr. Bax claims for the “Maximum” does not prove its applicability under normal conditions over a country. I maintain it would be less effective than total prohibition. This, however is not a point worth labouring, as revolutionary substitutes for the “Maximum” are to hand.

The reaction against capitalism in Britain has brought into existence the working-class co-operative movement. Comrade Bax should know that the petty trader to-day does not benefit by high prices, as he is being rapidly cut out by multiple stores and co-operation. The Progress Co-operative Society in Glasgow sells goods at a price that eliminates dividend, though not its five per cent. on capital, and yet its prices are frequently no lower than those charged by the large city shops. Retail prices, then, do not bring enormous profits. Wholesale prices have recently risen all round, and we know that wholesalers and producers are more and more dictating retail prices.

However, should a crisis in prices arise, it would be the business of us Social-Democrats in the co-operative movement to urge the abolition of dividend, the reduction of interest, and ultimately the reduction of prices. At the same time, we would urge municipal bakeries, stores, etc. Comrade Bax may thus see that I am not obsessed by petty bourgeois ideas, nor yet out of touch with working-class reality, as he undoubtedly is.

The great obstacle we Social-Democrats have to meet in co-operative circles is the notion that profits are made by the consumer, This generalisation naturally proceeds from the limited superficial outlook imposed by co-operative business details on minds untrained in economics. The only way we can get ordinary co-operators to understand the class struggle is by focussing on their minds on the boycott and the coming tremendous tussle between the Trusts and Co-operation, the capitalists and the workers; and then show that they as producers, and not consumers, create profit.

From in my experience in the co-operative movement, I maintain that it would be utopian folly to further deepen an existing fallacy by urging a maximum when we have the better expedient, supported by universal experience under normal conditions, of urging an extension of co-operation, municipalisation, nationalisation and inter-nationalisation as opportunity arises.

I deny the logical necessity of a maximum for prices as a corollary to the minimum for wages. We would be just as entitled to attempt to stem the use of new time-saving agencies in factories while enforcing hours reduction. Such a course would be against the evolution of production, and we therefore refuse to adopt it. We rather advocate the further reduction of hours as by thus pursuing the class war we are more rapidly hastening capitalism to its end and developing an intelligent class class-consciousness in the minds of the workers. So with wages. If prices rise we should get the workers to force up wages, whilst at the same time getting them to use the expedients already indicated.


1. See letter from Bax 3.12.2010 to which this is a reply. And Bax’s reply to this letter on 31 December 1910