If, during an election, you sit back and analyse what the various rival candidates are really saying you will find that virtually all of them share the view that the government has the power both to control the economy and to solve social problems. The promises they make are based on this assumption; so are the criticisms they direct at each other, all of which boil down to “you are a bad government” or “you were a bad government” or “you would be a bad government”.
This illusion that governments can solve economic and social problems—because it is other governments that cause them—is not just shared by politicians and their parties but by the vast majority of ordinary men and women, as any conversation about politics quickly reveals. Even those who appear to be the most critical of politicians and governments share the illusion. “They’re all corrupt” suggests that if all politicians were honest then things might be different. “What we need is a government of experts” suggests that things might be different if those who run governments were more competent. “We need a strong government” suggests that the problems are caused by weak governments.
That governments—all governments—have failed cannot be denied. Over the years all sorts of policies and political combinations have been tried, yet the same problems remain. Unfortunately too, most people still seek explanations in the realm of capitalist politics—bad policies, bad politicians, bad political structures—rather than considering that some other factor, such as the way society is organised, might be responsible.
Economic Laws of Capitalism
Governments are not in fact free agents that can do what they want. They operate within a definite economic and social system which severely limits their field of action. Present-day society is capitalist, in which wealth is produced not to satisfy human needs but to be sold on a market with a view to profit. Under capitalism the means for producing wealth are not the common possession of the whole of society but are monopolised, either as individuals or through the state, by a minority who thereby form a privileged class. The rest of society, the vast majority, can only get a living by selling their ability to work (their skills and knowledge) for a wage or salary.
Capitalism is a class-divided and profit-oriented society. It is an economic and social system which works according to certain definite economic laws-governing the level of economic activity, what is produced, prices and so on-laws which can be studied and understood but which cannot be changed. Basically, capitalism works in such a way that priority has always to be given to profit-making over human needs. Of course human needs are met to some extent but, as far as the wage and salary earning majority are concerned, in a quite inadequate way, as is shown by the persistent problems over such basic needs as housing, health and education.
Because capitalism is a system of production for sale on a market with a view to profit, its whole economic mechanism is necessarily governed by the search for profits. Priority has to be given to profits as they are capitalism's life-blood. This is the system’s economic logic, which imposes itself on individuals and governments whether they like it or not. As long as capitalism lasts there is nothing that can be done to change this; governments must not only respect this logic but also apply it. They can try to avoid this—as some have done for a short while—but in the end they have to accept the logic of capitalism that profits must come first.
The “housing problem” could be solved tomorrow if production were allowed to be carried on simply to satisfy human needs. The building materials to provide a decent home for everybody exist; so do the building workers. What prevents this happening is the economic law of capitalism which says that profits must be made out of producing things; and there is no profit in producing decent homes for people who can’t afford them. It is the same story in other fields such as health, education and the environment. Human needs are taken into account only to the extent that people have the money to pay for their satisfaction. If they do, then they constitute a market, supplying which is a potential field for profit-making.
For people’s needs to be met they must have money, but the amount of money most of us have is limited by the size of our wage packet or salary cheque—by, in other words, the proceeds of the sale of our ability to work to some employer. But, once again, this is something that is strictly governed by the economic mechanism of capitalism. Prices—and a wage or a salary is a price, the price of a person’s skills and knowledge-are not fixed arbitrarily, but depend on the average amount of labour expended to produce the commodity in question. In the case of a person’s ability to work this is the average amount of labour needed to produce the food, clothing, shelter and so on that the worker and their family need to live, together with the labour cost of the particular trade or skill. This is why the consumption of the wage and salary earning majority is restricted to more or less what they need to keep themselves fit to work. It is an inevitable economic consequence of their mental and physical energies being, like everything else under capitalism, a commodity bought and sold on a market.
But there is a further reason why the consumption of wage and salary earners must be restricted under capitalism. Profits are realised (converted into money) when a commodity is sold, but they are created when the commodity is produced. The source of profits is the unpaid labour of wage and salary earners; it is that part of the new wealth they produce over and above what they are paid in wages and salaries. So the latter can never rise too high since, in doing so, they eat into profits—the life-blood of capitalism. If this happens in a particular industry or country then production is cut back, workers are laid off and unemployment grows. The larger pool of unemployed acts as a downward pressure on the wages of those still employed, so tending to restore the original wage level. For wage and salary earners there is no escape from this vicious circle.
The International Dimension
Governments are also compelled to restrain wages and salaries by international competition. Capitalism exists all over the world, in countries like Russia and China (in the form of state capitalism) as well as in admittedly capitalist countries like Britain and America. But it is not a collection of separate capitalist societies each existing within the frontiers of the more or less artificial states into which the world is divided. Capitalism exists as a single world economic and social system, of which “Britain”, “America”, “Russia” and so on are merely parts. So, even if governments had the power to control economic activities within their frontiers (which they don’t), this would still only give them control over a very limited part of the world economy. They would still be at the mercy of external economic forces.
This is a very powerful restricting influence on the freedom of action of governments. Though rarely mentioned by politicians and their parties when making election promises, it is sometimes invoked by them when it comes to finding excuses for failure. “We have been blown off course”, they often explain correctly as it happens, since the pressures exerted by the world market on governments are so immense that they virtually dictate what policies they should pursue, at home as well as abroad.
Profits, we saw, arise out of the unpaid labour of wage and salary earners and are realised only when the goods in which this unpaid labour is incorporated are converted into money; when, in other words, they are sold. Capitalist enterprises, including those owned by states, compete against each other to sell their goods so as to realise the profits incorporated in them. So competition on the world market is not just competition for sales; it is above all competition for profits.
Any national government has to respect this and to help the efforts of the enterprises within its frontiers to amass as much profit as they can. Indeed, this can be said to be the role of governments within the world capitalist economy, which prevents them ever solving the problems facing wage and salary earners. For to protect and enhance the competitive position of enterprises within their borders, governments must help to restrict the consumption of wage and salary earners to no more than is necessary to ensure their productive efficiency. But it is precisely this restricted consumption that is the social problem facing wage and salary earners, of which shortages and inadequacies in housing, schooling, health, the environment and so on are but aspects.
If wages and salaries rise too high, then the competitive position of enterprises is undermined through cost increases. Government spending on social reform measures—building more houses, increasing pensions and allowances, providing better health services, improving educational standards, cleaning up the environment and so on—is restricted by the same economic mechanism. Government spending is financed either by taxation or by inflating the currency. High taxation causes capitalist enterprises to suffer because all taxes fall in the end on profits. Inflation raises the internal price level above the world level, making exports less competitive.
So the economic laws of capitalism not only act against wages rising too high; they also prevent governments spending too much on social reforms. In fact, in the long run, only those social reform measures which pay their own way, in the sense of increasing the productive efficiency of the workforce, are passed and maintained. Examples are: education to ensure better trained and more skillful workers; a health service to patch them up quickly so that they can return to work; social security schemes to try to ensure that their working ability does not degenerate in periods of non-employment. And if a government has miscalculated and proved to be too generous—as over the National Health Service introduced in Britain after the last war—then the situation is sooner or later corrected by the reform either being drastically cut back or slowly whittled away.
We can now see why the needs of the majority are not adequately met under capitalism and, what is more, why they never can be. The problems wage and salary earners face in meeting their needs—in housing, health, education, transport and the like—are inherent in capitalism. They arise from its very basis as a class-divided, profit-oriented society and cannot be solved within its framework.
This is why politicians and governments fail. It is not because they are corrupt or incompetent or weak. It is not because outdated political institutions and structures impede them. In fact it has nothing to do with politics at all. In trying to make capitalism serve human needs (which is basically what they are doing when they try to solve social problems) they are attempting the impossible. Capitalism simply cannot be reformed so as to serve the interests of the majority of its members—those who work for wages and salaries.
Opposition to Reformism
Once it is realised that capitalism’s basic nature can never be changed by reforms, then the futility of reformist politics becomes obvious. Governments which pass reform measures to try to solve social problems are like a doctor applying ointment when a surgical operation is called for. They are dealing with effects while leaving the basic cause unchanged—a certain recipe for failure since the same cause is bound to go on producing the same effects.
The social and economic problems facing wage and salary earners can only be solved by the abolition of capitalism and its replacement by a new and basically different social system in which production will be carried on solely and directly to satisfy human needs. This is why socialists refuse to advocate or support reforms to be implemented within capitalism, which distinguishes us from all other parties and groups, even those claiming to be “revolutionary” and “anti-reformist”.
This does not mean an opposition to all reform measures being implemented. Some reforms can bring slight temporary relief to groups of wage and salary earners and, knowing the difficulties of living under capitalism, socialists don’t begrudge this. What we are opposed to is advocating and campaigning for reforms, since seeking reforms of capitalism is a misuse of time and energy which can at best result only in a temporary alleviation of the situation. Then there is the fact that most reform measures are passed to smooth out some problem of one or other section of the capitalist minority rather than to alleviate the lot of the wage and salary earning majority. If all the time and energy devoted over the years to trying to get reforms had been directed towards getting wage and salary earners to understand the need to replace capitalism by socialism, then socialism would have been established long ago; the housing problem, the education problem, the health problem, the environment problem and all the other problems we face today would be ancient history.
Adam Buick
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