“FRAUD” is legally defined as “a deliberate act of deceit committed with the intention of gaining something unlawfully or unfairly.”

A dictionary definition provides the following: “deceit, trickery … or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.”  

Key words here are: “deliberate,” “intention,” “gain” and “profit/unfair advantage.”

The “benefits cheat” has long been a favourite scapegoat of the British media, though the number of cases has traditionally been low — as with voter fraud, another favoured distraction of late; there has never been wide-scale voter fraud in Britain.  

After the 2019 election, 595 cases of alleged fraud were investigated, resulting in only four convictions and two cautions.

Yet the British government feels justified in using these six cases as an excuse to introduce voter ID and further disenfranchise sections of the electorate.

A Marxist analysis helps us to go beyond individual behaviours, to understand and ask critical questions of power structures and social relations. 

Why, for example, does street robbery or burglary receive so much more censure when commercial fraud is more common, has a higher economic impact and deprives society of monies and powers which could and should be harnessed for the collective good? 

Fraud has long been a feature of British capitalism. Friedrich Engels, in his Condition of the Working Class in England (1845), described how in Manchester, “Fraud is practised in the sale of articles of every sort: flannel, stockings, etc, are stretched, and shrink after the first washing; narrow cloth is sold as being from one and a half to three inches broader than it actually is; stoneware is so thinly glazed that the glazing is good for nothing and cracks at once, and a hundred other rascalities.”  

Today consumer protection legislation has significantly reduced (though not entirely eliminated) such obvious frauds, particularly in food.  

As earlier Q&As (on inflation, on shopping and fashion) have argued, they have been replaced by supply-chain price-gouging, misleading advertising or packaging and a host of other (mostly legal) measures.  

But Engels’s conclusion still holds good today: “The lion’s share of the evil results of these frauds [he wrote] falls on the workers […] the poor, the working people, to whom a couple of farthings are important, who must buy many things with little money, who cannot afford to enquire too closely into the quality of their purchases.”

And while the popular image of a white-collar criminal is most likely a well-to-do professional “fiddling the books,” recent high-profile cases involving overcharging by electricity and gas suppliers and water companies dumping sewage in rivers and streams show that corporations and sometimes even public bodies can — and do — commit fraud.  

In his Outlines of a Critique of Political Economy, Engels examined how, with the rise of industrial capitalism “elementary, unscientific huckstering was replaced by a developed system of licenced fraud, an entire science of enrichment.”  

He argued that economists’ explanations of the status quo (based on the notion of free competition) were in themselves a form of deception.  

The term “national wealth,” he said, was itself fraudulent — a useful invention by liberal economists to hoodwink the public into believing that ill-gotten wealth, accrued through the ownership of capital, was best looked after by the sober representatives of the ruling class. The “national wealth” of the English, he said, is very great “…and yet they are the poorest people under the sun.”  

Marx, in Capital, dismissed accusations that communists wanted to abolish personal property, declaring that “the working class has no need to abolish personal property, which was abolished long ago, and is still being abolished daily; what must be abolished is bourgeois property, which is wholly based on fraud.”

Marx and Engels argued that capitalism is itself an intrinsically fraudulent system. The labour theory of value helps us understand how exploitation occurs and how power structures are used to keep this system in place.  

Capitalism is based on the supposed supremacy of the market, of free transactions, where buyer and seller are at liberty to decide what they want to buy and sell, to whom and for how much.  

This fiction of a free market is carried through into employment. The worker is “free” to choose who to work for and for what wage while the employer is free also to select the worker and what to pay. The reality is that power ultimately lies with the owners of capital — the “means of production.”  

Working people have no alternative but to sell their capacity to work because they have no other means of subsistence.  

Marx called this “wage slavery,” and for good reason; the “contract” between employer and worker, the binary choice of “work or starve,” dupes us into accepting living and working conditions which the owners of the means of production materially benefit from.  

The majority of us go about our daily work quite unaware of how much wealth we are creating and (as the first answer in this series argued) how much time we spend essentially working for free.

Money itself is a fraud. Presented simply as a token of exchange, without which the economy would grind to a halt, it is actually a vehicle for capital accumulation and, in the form of credit, of speculation (Marx called this “fictitious capital,”) a claim on the future production of surplus value.

All of this, of course, is concealed within capitalism, where the biggest fraud is perhaps the fiction of “fair pay” with wages the result of a “free exchange” between worker and employer, concealing the extraction of surplus value — produced by the worker but appropriated by the employer and realised as profit.  

And that’s without the unpaid wages — UK workers put in £26 billion worth of unpaid overtime during 2022 and over 200 employers were named by the government in June this year for failing to pay their staff the minimum wage.  

The consumer is also the subject of everyday fraud, on a much larger and more sophisticated scale than reported from Manchester by Engels in 1843 — from the “price-gouging” of essential commodities like food and energy to Primark’s look-alike fashion items.  

The victims again are working people, from British families who are seeing their living standards plummet to the 1,134 workers who were killed (with a further 2,500 injured) in 2013 with the collapse of the shoddily built Rana Plaza factory in Bangladesh where Primark’s (and many other clothing and fashion companies’) goods are produced.  

Engels declared that capitalism maintained its class divisions “by means of violence and robbery, trickery and fraud.”  

Antonio Gramsci in his Prison Notebooks examined how the state rules through its control of popular ideology — how people think — with coercion as a last resort.  

But, he declared, “between consent and force stands corruption and fraud (which is characteristic of certain situations when it is hard to exercise the hegemonic function, and when the use of force is too risky).” 

Capitalism “gaslights” us, the workers, into believing it is our protector. A gaslighter, like a fraudster, deliberately deceives us in order to gain materially.  

Capitalism convinces us that we need it — if it collapses, we won’t be able to look after ourselves. It maintains control using (among other tactics) the dominant narrative that its particular mode of production is “the natural order” acting in everyone’s best interests. 

It isn’t, it doesn’t, and we need to change it. 

The Marx Memorial Library’s autumn programme continues tomorrow (October 3) with the start of an eight-week online Introduction to Marxism course. Details of forthcoming events are available at www.marx-memorial-library.org.ukhttp://www.marx-memorial-library.org.uk  together with downloadable copies of past Q&A (this is number 105).