Editorial: All fiscal conservatives now (2023)

Editorial from the August 2023 issue of the Socialist Standard

So Starmer says he doesn’t object to being called a ‘fiscal conservative’ (BBC interview, 16 July).

The Labour Party used to seek support on the basis of providing social reforms that would benefit workers. That in fact was said to be their reason for existence and why trade unions supported them. Not any more. Starmer could not have been more specific when two days later he declared that ‘it was “a big mistake” for the left to equate spending money with radicalism’ (Times, 19 July).

Quite apart from the fact that this is a betrayal of the views he feigned to hold when seeking election as Corbyn’s successor, the economic policy he now espouses is basically the same as Truss’s — which both described in the same terms as ‘Growth, Growth, Growth’. In other words, to try to force the capitalist economy to expand more. Since governments produce no wealth of their own, the only ways they can get money to fund their activities are taxes or borrowing.

The Truss government tried to encourage growth by cutting taxation on capitalist enterprises while leaving government spending more or less unchanged; which meant the shortfall would have to be paid for by increased borrowing. The international speculators who lend money to governments were not prepared to play ball and a financial crisis ensued which led to the fall of the government.

Starmer and the Labour leadership realise they have to avoid this. As Yvette Cooper, the shadow Home Secretary, put it:

‘We saw what happened with Liz Truss and Kwasi Kwarteng’s mini-budget. They ended up promising huge tax cuts for the rich. None of it was funded and they ended up crashing the economy’ (Times, 18 July).

So as not to spook the international speculators they are not even prepared to offer minor reforms for the workers such as lifting the ban on parents on Universal Credit claiming benefits for more than two children. No, they are assuring the markets that they will be ‘fiscally conservative’.

Labour’s promise to make capitalism grow is a gamble as experience has shown that governments cannot do this. The most they can do is sustain conditions that might encourage profit-making but the final decision as to whether or not to expand production — to grow — rests with individual capitalist enterprises and their estimation of whether or not doing so would be profitable. Sometimes it will be; sometimes it won’t, but no period of growth is ever permanent.

Unless it is very lucky in that world market conditions bring it about, a Labour government will not see capitalism grow as much as they are promising. When growth stalls they will have to continue to be ‘fiscal conservatives’ and cut payments to workers, including the poorest, just as all previous governments, Labour as well as Conservative, have done.

Starmer is in effect admitting that reformism has failed (as we always said it would). His conclusion is to abandon reformism and embrace capitalism and its logic. Ours is to go for socialism, the common instead of class ownership of resources and production directly to satisfy people’s needs not for profit. The choice is what it always was — capitalism or socialism?