Saturday, April 16, 2016

Applying the logic of capitalism (1984)

The Letter From Europe column from the June 1984 issue of the Socialist Standard

At the end of March the PS-PCF coalition government in France announced a plan to “restructure" the steel industry involving the closure of a number of steel works, including some relatively modern ones built just before the steel crisis broke in 1974 and the disappearance of over 20,000 job opportunities. Particularly hard hit will be the Lorraine region which had already suffered considerably from the cutbacks announced in 1979 under the previous. Openly pro-capitalist government of President Giscard and his Prime Minister Raymond Barre.

This plan represents the shattering of yet another illusion entertained by the PS and the PCF before they came to power: that a government can expand an industry simply by an act of political will. Certainly, if it is prepared to make the money available. a government can get a nationalised industry to produce more, but what it cannot do is ensure that this extra production is sold which after all is what production is all about under capitalism.

Two or three years' experience of governing capitalism has now taught the PS (if not the PCF) that the aim of production under capitalism is not to provide jobs for workers but to produce goods to sell at a profit. "It must be understood”, declared the Minister of Industry, Laurent Fabius, on television on 3 April, “that we can't produce steel if it can’t be sold". Answering questions in Parliament two days later the Prime Minister. Pierre Mauroy, admitted that the government was planning to close some relatively modern steel plants but explained “Even a modern investment is no use if the products it turns out have no market and if they can't be sold" (Republicain Lorrain, 6 April). In fact Mauroy was already on record as having exclaimed in 1982: “Don’t count on me to manufacture steel that won’t be able to be sold!” (quoted in the Republicain Lorrain, 4 December 1982). Socialists of course never did. though a number of now very angry steelworkers seem to have done.

The reaction was such that Mitterrand himself had to descend into the arena. At a press conference on 4 April, after restating a basic truth that if France was to survive in the battle of economic competition its "goods must be produced of equal or better quality than the others and at at least equal prices”. Mitterrand declared that "the margins of enterprises must be restored" (adding hypocritically, “I didn't say profit’’):
Money must be made to put into investment by choosing technologies that pay and by helping enterprises that take risks.
As a matter of fact the PS-PCF government has been pursuing a deliberate policy of restoring the profit margins of enterprises since the middle of 1982 when, as a first step towards this, it imposed a four- month wage freeze. At the same time the Minister of the Economy, Jacques Delors, openly stated the government's aim:
A recovery of gross operating revenues of enterprises is needed to restore a dynamism to our economy.and without a minimum of transfers of the national wealth to these gross revenues the minimum conditions for investment will not be met (Republicain Lorrain, 28 October 1982).
Figures published recently by the French statistical office indicate that this policy has been successful. Whereas in 1981 gross profits of enterprises fell in real terms, in both 1982 and 1983 they rose by more than the rate of inflation. Thus Delors was able to proudly declare in a recent newspaper interview:
In two years of “financial policy", since we had to start there, we have transferred to enterprises the equivalent of 1 per cent of the Gross Domestic Product (Libération. 13 April 1984).
This represents about 40 billion FF (about £3.4 billion), not bad for a government which came to power on a programme of redistributing wealth to the workers rather than the capitalists! Since “financial policy” is only a euphemism for "austerity”, most of the cash which the government has tranferred to enterprises has been at the expense of social benefits, wages and salaries and. through the wages saved by sacking workers, of employment.

As Le Monde (18 April 1984) put it in a headline which says it all, when it reported the March unemployment figures: “THE GOVERNMENT IS GIVING PRIORITY To IMPROVING THE SITUATION OF ENTERPRISES TO THE DETRIMENT OF EMPLOYMENT: The number of unemployed has increased more in 3 months than throughout the whole year 1983”. Another strange achievement for a government which was elected to power on a promise to give priority to the fight against unemployment.

The previous government under Giscard and Barre also took steps, with the same success, to increase the profits of enterprises, but the depression continued. For increasing the amount of cash at the disposal of enterprises does not mean that they will automatically invest it in production. Companies will only do this if they think they can sell profitably what will be produced; in other words, if there is a profitable markets for their products. Otherwise they will simply hoard the money, or rather, lend it out at interest to banks or the government. Commenting on Barre's disappointment in 1979 that "the improvement of the funds and profits of enterprises has not brought about the expected investment boom”, the French newsweekly, L'Express (8 September 1979), noted:
You can take a horse to water but you can’t make it drink. A head of an enterprise will not buy machines without outlets for the products which they will turn out.
Precisely, and Mitterrand's re-adoption of the policy of taking steps to increase the cash in the coffers of enterprises will no more automatically bring about a revival of investment than Barre was able to. In fact the figures for 1983 show that enterprises have not been using the extra cash the government has helped them to acquire to invest, since investment by enterprises actually fell by 4 per cent that year.

Mitterrand's PS-PCF government is in fact doing all that any government of capitalism can do in the circumstances: giving priority to profits and "restructuring” (which means sackings) while waiting for world capitalism to move on to the next stage of its economic cycle. This is in stark contrast to what the PS and PCF said they would do before they came to power in 1981 but capitalism is a system which no government can control, even less reform so that it works in the interest of wage and salary earners. On the contrary, capitalism can only work against those interests and governments have in the end no choice but to go along with this. The utter failure of the reformist PS-PCF government in France is yet another confirmation of this.
Adam Buick

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