Cooking the Books: A front line service (2010)

The Cooking the Books column from the July 2010 issue of the Socialist Standard

“‘Voters must agree on cuts or the nation will be hit with £70bn a year interest bill,’ says Cameron”, reported the London Times (8 June). It’s part of a government propaganda drive (gleefully supported by the media) to soften us up for the ‘new Age of Austerity’ and ‘years of pain’ capitalism is forcing them to implement.

Cameron said that “on current trends, Britain would be paying by 2015 £70 billion a year in interest on the national debt – more than the present budgets for schools, climate change and transport put together.”

This calculation is based on nothing being done to cut the present budget deficit – the excess of government spending over income – and covering it by more borrowing, i.e. by increasing the so-called “national” debt (which is more properly called the Government Debt). It’s being bandied about to try to get workers to accept that the budget deficit should be reduced mainly by cutting government spending on benefits and services workers have come to accept as part of their standard of living.

Cameron, Clegg, Osborne, Cable and the others are saying we must all make sacrifices to reduce the deficit. But not quite all. Not those capitalists, national and foreign, who lend the government money. Paying interest to them is part of government spending, but servicing the Government Debt is obviously the frontest of “front line services” since the government has no intention of even thinking about cutting these payments.

Payment of interest on the Government Debt is, like welfare benefits, a “transfer payment”, that is, a transfer via the government of income generated from production to some other group who don’t or can’t participate in production. The beneficiaries in this case are those who have lent the government money, mainly various capitalist institutions and corporations. The money transferred to them comes from “the taxpayer” who, in the end, are the recipients of profits and other property incomes.

The income of the holders of the Government Debt is sacrosanct because it’s part of a contract that can’t be broken without dire consequences. A government can renege on its debts but the “international community”, i.e. the rest of the international capitalist class, will never forget. They won’t lend the government money in future except under more onerous conditions (notably at a higher than normal rate of interest). And they won’t forget the debt. So, repudiating paying the contracted rate of interest on the Government Debt either totally or partially or even slightly is just not an option, given the way the world capitalist economy works.

The government could in theory reduce the deficit by increases taxes. However, given that these ultimately fall on profits and that profits are what makes the capitalist economy go round, their margin of manoeuvre here isn’t much wider than over interest payments on the national debt.

What’s left then? Only cutting government expenditure. What in Gladstone’s day was called “retrenchment” (the Liberals have gone back to their 19th century roots). This can be on anything including preparations for war (“defence”) and subsidies for particular capitalist industries, but the obvious target will be the total bill for the salaries and pensions the government pays its employees and various payments that are made to other people or to provide services for them.

What a future capitalism has to offer workers: struggles to try to slow down things getting worse in a world that it technically capable of providing plenty for all.

Greasy Pole: Friends (?) in need (2010)

From the July 2010 issue of the Socialist Standard

Waking up on the Seventh of May, the voters might have experienced a measure of confusion. In the polling stations they had done their civic duty, after months of suffering bombardment from the three main political parties on the theme that we are in a mess and unless you do as you are told it will get even worse, to the point of social collapse too horrible even for seasoned politicians and propagandists to contemplate. You must take immediate action to forestall such a disaster by helping to put a new government into power. But it is important that you are careful to support the right party and not vote for one party when you really support another - for example vote Liberal Democrat when you would prefer a Conservative government. Or vice versa. Or, even worse, to complicate the matter by introducing other parties like Labour, Scottish and Welsh Nationalists, UKIP. So that was what the voters did, in their millions.

But on the day after it became clear that no one party would have a majority of elected MPs, which made forming a government rather more complicated than had been intended. British capitalism held its collective breath; the Stock Exchange, traders and bankers twitched and writhed; this was not what popular suffrage was supposed to be all about. But the day was saved when the three big parties announced a change in their attitude. No longer contesting over one of them being in government alone, they were suddenly certain that the best – the only – way out of the crisis would be for two of them to make up a government in alliance. Majority government was, in other words, no longer the smart option; it had become the old, stale politics. In its place was Coalition – the new, resuscitating politics. And if this made the voters confused – well so were the politicians.

Cameron And Clegg
Just over a week before polling day the leaders of the Tories and the Lib Dems had assured us that they were in no doubt about the disastrous consequences of their rival being elected at the head of a new government. On 26 April this is what David Cameron thought about Nick Clegg:

“It's now all becoming clear...he's only interested in one thing and that is changing our electoral system so that we have a permanent hung Parliament, we have a permanent coalition, we never have strong and decisive government...he wants to hold the whole country to ransom just to benefit the Liberal Democrats.”

(This view of Clegg – as a ruthless, scheming manipulator – differs from Cameron's previous contempt for him as “a joke”, but never mind). Meanwhile Clegg had expressed his own doubts about Cameron's character and political ambitions:

“The Conservatives are so desperate that they have resorted to a crude form of blackmail. David Cameron and George Osborne are stoking up fears in the markets, actively trying to destabilise the pound and reduce the Government's ability to borrow. It's like a protection racket; vote for us or our friends in the City will lay waste to your economy, your savings and your job.”

But hard words had to be smoothed away by the prospect of a Coalition. In that teeth-grinding press conference in the garden at Number Ten, with both leaders behaving like affectionate old school chums, Cameron sniggered when reminded of his sneer that Clegg was a joke. Instead he he trumpeted that this Coalition would mark a “historic and seismic shift” in British politics, with Tories and Lib Dems united on the key principles of “freedom, fairness, responsibility”. And Clegg, not to be outdone for florid vacuity, announced that the government with him as Deputy Prime Minister would be “a source of reassurance and stability”. After which all that was left was for the Lib Dems to explain to their local parties and to their voters why the prospect of being a voice in government was so seductive as to persuade them to drop so many of the policies which were central to their their appeal for votes. But dishonouring election pledges is the very stuff of government – something Deputy Prime Minister Clegg and his party may become even more familiar with in the near future.

Along with the celebrants of the Lib Dem once-unforeseen elevation into the dangerously dizzy heights of power – like Nick Clegg, David (tragically briefly) Laws, Danny Alexander – were those who were outraged at what they saw as a blatant betrayal of what had comforted them as their party's vital policies.

MacDonald
This is not first time an election has exposed those whose energy has blinded them to the cruel reality of the political system they were immersing themselves in – its brutal cynicism, its ready acceptance that its policies are there to be modified, compromised or if need be wiped out, its leaders ready to accept, indeed revel in, what they had repeatedly said would be unacceptable.

The general election of May 1929 resulted in a hung Parliament with the Labour Party, under Ramsay MacDonald, winning the most seats. Outside Westminster, in the mines, factories and shipyards an historic slump was gathering and unemployment rising. By August 1931, with the situation worsening almost by the day, MacDonald might have done the honourable thing and admitted that his party's government was impotent, confused, disintegrating. Instead he approached the Liberal and Conservative parties with a proposal to form a Coalition. With the other leaders –Baldwin and Samuel – he went to inform the King who, when told that MacDonald had the resignations of his Cabinet ready, replied that he “trusted there was no question” of MacDonald's being among them; it was up to them to “come to some arrangement”. A Coalition government, combining Tories and parts of the Labour and Liberal Parties and led by MacDonald, took over.
In the following general election MacDonald's National Labour Party was all but wiped out and the remnant of the Labour Party reduced to a derisory fragment. All this while the slump ground on. There is no reason to believe that now, in the time of Cameron and Clegg, the situation is any different from the 1930s – that the disasters of capitalism are any more curable by two parties in fragile unity than they were by one separately.

Ivan