Steering the Economy (1982)

From the June 1982 issue of the Socialist Standard

Those who seek political support for capitalism have two differing solutions for its present economic troubles. Supporters of Margaret Thatcher believe that the solution lies in a reduction in government spending combined with “wage restraint” which, in effect, means a reduction in real wages. Even among Conservatives, support for this policy is not whole-hearted. It has been described as the “right wing” view. This policy is bitterly opposed by the “left”, composed mainly of Labour Party supporters, and by some Liberals and Social Democrats. These exponents of capitalism are united in believing that government spending should now be increased “to stimulate the economy”and reduce unemployment. It should here be noted that the last Labour government, faced themselves with the problems of administering capitalism, carried out a policy of cuts in public expenditure.

So, which way to turn? Left or Right? The purpose of this article is to show that along neither path lies a solution to working-class problems. In attempting to explain the dilemma clearly and in the space of a short article, some simplification will be made in what is obviously a very complex set of interacting factors.

Those politicians who claim to represent the working class assert that government spending should be increased to build council houses, improve health services, maintain educational standards, repair roads and sewers and, above all, to provide employment. Such activities do not themselves realise a profit, otherwise the government would not be called upon to provide the finance. The purpose of such “social” expenditure is not normally to provide employment but rather to provide the conditions in which workers can be employed in other, profitable, enterprises.

The three sources of government finance are: taxation, loans and currency inflation. Taxation takes many forms, direct and indirect: company tax, income tax, value added tax, excise duty and the like. On the other hand, the government may borrow money, again from many sources: finance houses, banks, insurance companies, the general public, and soon. Finally, when this country abandoned the gold standard in 1931 the way was clear for governments to meet part of their expenses by authorising the Bank of England to increase the supply of inconvertible currency—in other words, by printing an excess of paper money.

We come now to examine the repercussions of these three forms of government spending. Increased taxation reduces profits in a number of ways. Company tax reduces it at the source. Personal income tax on unearned income reduces the dividends received by shareholders. Personal income tax on earned income is also a drain on profits; broadly speaking, wage workers have to be paid enough to allow them to work efficiently and rear children to replace themselves. Their wages must therefore provide for the payment of income tax—as well as various forms of indirect taxes. This is not to say that a general change in taxation does not temporarily affect the standard of living of wage workers. But, in the long term, resistance to any downward pressure on living standards brings wages back to what is socially necessary for efficient production.

To the extent that profits arc reduced by increased taxation, one result has been an increase in investment abroad, in the search for higher profit margins. Another effect is a loss of competitiveness on overseas markets. Reduced profits result, in these and other ways, in reduced production. As an alternative to increased taxation, governments may increase their borrowing. Not only is this merely postponing the repayment of loans (and interest) by other means but also it has the effect of increasing interest rates. The government competes on the money market against the needs of private enterprise, with a consequent increase in interest rates and curtailment of expansion—and in many cases a reduction of production. The third source of government finance, currency inflation, also has the effect of increasing interest rates. The excess issue of paper currency by the Bank of England results in a reduction in its purchasing power. Those who lend money expect to receive an increased return to take account of the effects of inflation. Building Societies find that they have to increase their interest rates to investors, which they will try to pass on to present and prospective borrowers— further impoverishing those workers with mortgages.

Currency inflation reduces real wages by the resultant increase in prices. In 1975, according to the government’s Retail Price Index, prices rose by 25 per cent. This led to demands for wage increases which in many cases could only be achieved by strike action. The present government’s policy of “wage restraint” means a reduction in real wages as prices continue to rise. The major reason at present for the reduction in production and massive unemployment is a worldwide trade depression; but an increase in government spending, although it may provide a limited increase in employment in some areas of the economy, causes a reduction in production in others. This is why all previous attempts by governments to “spend their way out of a recession” have always failed.

To complete the explanation it should be noted that the increase in unemployment due to reduced production means an increase in the total of unemployment benefit. This in turn involves increased government spending—unless the rate of benefit can be cut in the same proportion as the increase in unemployment, and there are obvious limits to this. Moreover, increased unemployment means that the total purchasing power of the working class is reduced. This reduction in purchasing power causes a further reduction in production in those areas of the economy related to working class spending. In such areas there will be a consequent increase in unemployment.

As compared with a policy of increased government spending, the repercussions of a reduction are more direct and immediate. For example, economies in education result in fewer jobs for teachers. Government curbs on local authority spending not only result in a direct reduction in manpower but also in enforced savings in money spent on materials. The slowing down of local authority housing programmes is an example of this. Examine any attempt to reduce central or local government expenditure and it will be seen that a reduction in employment follows. It should also be pointed out that, even where such expenditure is not reduced in money terms, there may in fact be a reduction in real terms due to inflation.

Whether government spending is increased or reduced, there is no way out of the maze of contradictions inherent in the capitalist economy—whether this be private enterprise capitalism or state capitalism (as in Russia) or a mixture of both. The gains made by the working class (those who have to work for wages or salaries) during periods of economic prosperity for the employing class, are rapidly eroded during periods of trade depression. The key to an understanding of the limitations of the present economy can be found in the fact that, in the main, unless capital can be invested at a profit, production ceases. This is a fundamental law of the capitalist system. It is no matter that raw materials and labour, the sole requirements for wealth production, are available in abundance without the prospect of profit, production ceases.

In a socialist society this restriction would be removed. Wealth would be produced solely to satisfy human needs—and in the modern world we have the potential to produce wealth in abundance. There would be no trade depressions because there would be no trade—just distribution. There would be no money because money is only required for trading. There would be no “unemployment” as the working class experiences it—work and “leisure” would be undistinguishable. In fact most of the terms in this article would become obsolete. The “left” and “right” would only be remembered as wings of the same predatory bird: capitalism.

John Moore

The State of Medicine (1982)

From the June 1982 issue of the Socialist Standard

The National Health Service was sold to us as a guarantee of health and security but is itself now the invalid of the Welfare State. If not actually bankrupt, it suffers from a lack of much needed investment. If not completely chaotic it is periodically shaken by massive reorganisations which attempt to relieve its administrative problems, often by reintroducing a system previously condemned as restrictive and inefficient. In April 1974 a “three tier” structure was imposed, which severed all links with local authority control; now the latest reorganisation has brought back the District Health Authorities, which include local councillors. At the receiving end of all this are the aptly- named patients, who bring their ailments to the surgery or the hospital in the hope that the NHS is alive and well and competent.

This hope is sustained by a popular misconception of the role of the state as the beneficent, munificent parent of us all its children. This concept springs from the belief that only the state has the resources to run something which is both essential to everyone’s interests and wide enough to operate in that way. For example, the Armed Forces are supposed to protect “our" country, “our" freedom, “our" way of life. The driest of Tories would never suggest that the forces should be owned and financed by private companies—quoted on the Stock Exchange, subject to take-overs, asset stripping and the rest. In the same way, when the coal mines were seen as necessary to the efficient and profitable operation of British industry they were taken away from the fragmented, competitive set-up of the private pit owners and were nationalised.

It was on the same theory that the NHS was born. Before the war, medical services in Britain were disjointed and unco-ordinated, varying in resources and efficiency from one area to another—and not necessarily in accordance with the demands for them. There were over a thousand voluntary hospitals, from large establishments with the most modern equipment and some weightily distinguished consultants down to the small, struggling cottage hospital. About 2000 more hospitals had been founded by local authorities or had sprung from the sick wards of workhouses. They were often precariously financed, living off donations, bequests and flag days, even selling their wall space to the advertisers of patent medicine, which must have been rather confusing to the patients. This haphazard development extended to the other branches of medical care such as GPs, medical inspectors and so on. There was a compulsory medical insurance but this covered only wage earners, excluding their families and was not valid for any treatment other than by a GP.

The war gave an opportunity radically to reshape this confusion into some sort of order and a basis for this was provided by the state-run Emergency Medical Service (EMS) which was at first designed to deal with air raid casualties but whose scope was widened to take in other categories such as evacuated children. The EMS directly employed doctors and nurses, for a wage, and it took over entire hospitals so that by September 1941 it controlled ½ million beds.

At the same time the government was aware of the need to proffer some promises of a better world after the war. as an encouragement to the people who were suffering in the battles, under the bombs and so on. The most famous of these pledges was the Beveridge Report, prepared by a committee which started its work just as Germany was invading Russia and which produced its findings in late 1942. Beveridge promised that “a comprehensive national health service will ensure that for every citizen there is available whatever medical treatment he requires, in whatever form he requires it”.

The coalition government accepted Beveridge’s health service proposals and before their defeat in 1945 two ministers Ernest Brown (National Liberal) and Henry Willink (Conservative) presented plans for a National Health Service on the model suggested in the Report. It was of course left to the Attlee government to push through the necessary Act, to fight the British Medical Association over doctors’ pay and conditions—and eventually to take the credit for what they wrote into history as a great humanitarian reform.

Experience, and the adaptation of the NHS to the everyday needs of a society based on class privilege, have exposed the reform for what it is. Only the most myopic devotee of the NHS would now claim that its services are of the highest possible standard and are freely and equally available to everyone. There is a swelling tide of frustration and disillusionment with the NHS; the 1979 Royal Commission on the NHS commented: “Nor does the evidence suggest that social inequalities in health have decreased since the establishment of the NHS. The position (of partly skilled and unskilled workers) appears to have worsened relative to those in (professional and managerial jobs).”

An essential part of the best treatment is that it should be immediately available; most conditions which need attention can only get worse the longer they are neglected. But one of the big problems of the NHS are the waiting lists, which are well above the half-million mark. An especially grisly economy operates in the waiting lists: economy because it is a matter of resources which are expensive and therefore scarce, and grisly because it often means the death of some of those who are kept waiting. As might be expected, Enoch Powell has described the situation in stark, heartless words:

  If the hospital resources are to be continuously used, there must be awaiting list, a cistern from which a steady flow of cases can be maintained. Private practice can afford to have gaps because patients are buying time. (A New Look At Medicine and Politics.) 

This probably sounds very sensible on the Stock Exchange, or to government ministers who are aware of their responsibility to run this society in the interests of a small minority. The actual flesh and blood people, who suffer and die in the queue, can be expected to see it differently. In the case of kidney disease, for example, the decision to treat or to abandon the sufferer to die is largely dependent on their place in the economic order of priority. One leading kidney specialist has described the dilemma:

  The financial situation is now so acute that children are having to compete with adults for treatment and they tend to lose out because priority has to be given to adults who have families to look after and mortgages to maintain. (Quoted in The NHS — Your Money Or Your Life, by Lesley Garner.)

Many people are trying to escape these obstacles by buying their way into private treatment. The result has been a boom in the insurance schemes like BUPA and Private Patients Plan. Most of this expansion comes from companies who are paying to insure their workers; from their point of view the pay-off is in a quicker, planned admission to hospital, less time off work and easier access to the patient while they are in hospital. (The numbers of people insuring themselves, in contrast, is falling.)

But the private sector too operates on something of a delusion. The kind of insurance which is affordable by wage earners covers only a limited range of ailments—typically, an operation which requires only a brief stay in hospital both before and after the event. It does not cover the chronically sick, the lingering terminally ill, the physically or mentally handicapped, the old people who need intensive nursing during a senility which intensifies towards death. These sorts of ailments can be treated privately but to do so would cost the sort of money which is beyond the scope of the insurance schemes. As one consultant in mental handicap put it: “In mental subnormality you see the patient for the rest of their life”. It is, then, no surprise that BUPA favours a mixed state and private medical service, with the private schemes taking the cream of the short-term patients while the NHS grapples with the rest. A foreseeable result of that would be to depress the state service even further, as investment, doctors and nursing staff were attracted into the private sector.

Whatever the outcome of this conflict, we can be despairingly confident that the basic, vital facts about health and sickness will receive only scant attention. The vast majority of death and disease today does not happen through an accident, nor is it unavoidable. For example, thirty million people die every year from starvation, simply because they are too poor to escape from a famine which itself is the result of the production of food as commodities rather than to meet human needs. Then there are the “industrial” diseases like asbestosis, which are a direct consequence of the way in which some workers get their living and which inflict a brutally slow, agonising death on their victims. More subtly, there is the sickness which can be written into the death certificate as due to other causes but which is in fact the result of the jobs their victims do or the places where they live.

The Working Group on Inequalities In Health recently reported that a labourer, a cleaner and a dock worker are twice as likely to die as is someone in the “professions”; they are twice as likely to suffer respiratory and infectious diseases, have trouble with their circulatory and digestive systems. The distinction is a false one, since both “labourers” and “professionals” are members of the same class but the point is made; it is the former who in many ways suffer the harsher degree of exploitation, the heavier weight of impoverishment. More evidence comes from Professor Harvey Bremner of John Hopkins University, who has spent some twenty years studying the subject. Bremner is convinced that economic stress on workers stimulates physical and mental illnesses; specifically he says that a rise of one million in unemployment over five years could cause an extra 50,000 people to die and 60,000 more cases of mental illness. He also says that Scottish workers are under a peculiar stress, due to a more severe competition between industries there and this is reflected in sickness striking quicker, and more harshly, when there is unemployment.

So it comes down to a matter of class. The working class—those people who need to sell their working abilities in order to live—include those who do the dirty, monotonous, dangerous work as well as those who do the stressful, ulcerative jobs in “management” and the “professions”. It includes the people who crowd into cramped, jerry-built homes under the pollution of industrial capitalism. The other social class, who do not have to work because they own and control the means of life, can afford to live away from all this; they experience no stress of insecurity, their homes are spacious and leisured, they have access to the best of diets. If they want it that way, their lives can be a continuous recreation. The medical care they can command was typified in Tudor Hart’s Inverse Care Law. which laid down that the availability of good medical care varies inversely with the needs of the people it serves. Simply, they can have the best of everything—the best homes, food, education, medicine.

This class do not need the National Health Service, which was designed for the workers, to patch them up and get them back to work as quickly and as productively as possible. Whatever medical care is available to the working class exists only because it contributes, in the short or the long run, to the production of profit and the accumulation of capital. One of the reasons for setting up the NHS, for example, was that it is cheaper to pay for the hospitals, GPs, health centres and the rest through taxation than through the complex process of means testing, claims and rebates which was operated in the private system. Doctors who have trained for years to relieve sickness are persistently faced with agonising choices, based on the demands of a balance sheet rather than human comfort and survival:

   If I abandon or downgrade the patient with advanced cancer of the stomach in favour of two patients with hernia, how do I make a cost benefit analysis? How do I equate the loss of six months dyspepsia-free survival with the economic utility of the return of two breadwinners to work? (Garner, op. cit.)

Well, she or he can’t. The NHS is sick because at best it is struggling against the inexorable demands of the social system in which human needs count for little. Capitalism deprives its people of their dignity in many ways — in sickness and in health and in the end in their tragic, unjustifiable deaths.

Ivan

Appreciation. (1915)

From the August 1915 issue of the Socialist Standard

The following are selections from messages of encouragement and appreciation which have reached us from many corners of the far-flung Empire in which we live. As adumbrated in the leading-article, these messages are at once an encouragement and a fulfillment.

"Having read perhaps the bulk of Socialist (real or so-called) printed in the English language, we wish to express admiration regarding the attitude taken up by the S.P.G.B. towards the European conflict. It is certainly a beacon light for the others. May your propaganda continue to spread. It is the only antidote to patriotism and the other poisons instilled into the minds of the workers.”

T. Anderson, J. Sullivan.

Blackball, New Zealand. 

Trusting you will continue to maintain your clear-cut and unequivocal stand, unlike so many of the pseudo-Socialists in the land of your masters, and in other lands, I am
                                                                    Yours for real education,

Simon Freestone.  

Lethbridge, Alberta, Canada.

I, along with the Party here, greatly appreciate your stand during the present crisis.

Robert Temple.

Nanaime, British Columbia.

I am pleased to say that I have bean receiving the "S.S.” regularly lately, and that it still keeps up its reputation as the best Socialist paper published.

F, C. Wright.

Moose Jaw, Saskatchewan.

"Members admire the stand and courage of tbs S.P.G.B.”
"Wherever the 'Socialist Standard’ has been read it has met with approval.”

E. R. Bales.

(Sec. Socialist Party of North America.) 

Toronto, Ont.

I think l can truthfully say that yours is the most consistent of any publication I know of, and I have passed many of my copies to comrades. Each and every one agrees that you are treading the only path possible for a clear-cut revolutionary organisation.

Jas. Brereton. 

Edmonton, Alberta, Canada.

I may mention that the comrades of the S.P.G.B. have the goodwill and appreciation of the local comradec.

Sidney E. Gage, 

William Avenue, Winnipeg, Manitoba.

  I am at a loss for words in which to express my admiration for the great little paper, and keen appreciation of the courageous stand of the S.P. of G.B. in these trying times. I recognise fully that from the class-conscious proletarian standpoint it is the only stand to take. The act remains, however, that there are numbers who have certain convictions, and who know the causes, yet lack tbs courage of their convictions.
  In the midst of the confusion obtaining in the ranks of labour as a result of the mouthings of the different labour fakirs, and the outpourings of tbs various intellectual prostitutes and other humbugs, the attitude of the "Socialist Standard” is clear and unmistakable; it is a beacon of light in a wilderness of stygian darkness.

F. J. Connett,

Kenora, Ontario.

Editorial: A Year of War. (1915)

Editorial from the August 1915 issue of the Socialist Standard

With the present issue the “Socialist Standard” will hare completed an extremely important volume. Socialist propaganda under war conditions in the capital of a belligerent nation is naturally not the easiest of tasks,yet throughout this onerous year, as heretofore, that task has been faithfully accomplished. We have the consolation of knowing that we have said nothing that we shall need to unsay when "peace" comes—be that soon or late. And we have said many things that we are most thankful to have said; and have kept the Socialist flag proudly flying in the face of the coalition of robbers, the treachery of labour organisations, and tbs hostility of a, people war crazed. And we have, moreover, the somewhat melancholy satisfaction of knowing that we are the only party in the belligerent countries—so for as can be ascertained—that has not betrayed the Socialist position.

At the beginning of the war every effort was made to maintain outdoor propaganda meetings, but the brutality of crowds made drunk with patriotism, the prohibitions by the authorities, and the series of police prosecutions of our speakers, compelled the rank and file of the Socialist Party to put an end to the fruitless sacrifices of their spokesmen by stopping outdoor propaganda. But propaganda did not cease. It changed its form.

The "Socialist Standard” became of even greater importance to the Party, and it has unflinchingly held high the flag of intelligent revolt against the system of robbery and murder.

Yet even here the mailed fist has been closing in. Every month that passes sees an increasing restriction of the liberty of the Press. Tbs assassination of freedom of speech was followed by the destruction of the liberty of the Press. Unceasing vigilance has been and is needed to keep the "Socialist Standard” out of the grip of the brutal bands of the ruthless coalition of exploiters. And it will be our endeavour to keep this "Standard” constantly fluttering defiance of oppression until the workers come at last into their own.

Throughout the year the Party has stood as one man. There has been no doubt, no hesitation, and no faltering in its ranks as to the attitude to be adopted. And this unequivocal maintenance of the Socialist position amidst the difficulties of this hellish time, has completely justified our faith in the efficacy of Socialist education. Once the working doss as a whole are imbued with Socialist knowledge the cause is won. No blandishments of patriotism, no lies of an unscrupulous and corrupt Press, can then seduce them from the accomplishment of their mission. Therefore we continue in the work to our hands—the great task of Socialist education, satisfied that at least we have done our duty as far ac in us lies during this year of madness and murder.

There is also satisfaction to be obtained from the fact that the circulation of our official organ has been wall maintained during a period noted for its shipwreck of labour journals. This journal, as well as the Party, emerges strengthened by its time of trial; and the volume that now closes will have a particular value in after years as a record of the firm stand of the Socialist Party of Great Britain for Socialist Principle in the midst of almost universal apostacy.

Nor has this voice of the Party been unheard or its work unappreciated. From far and near have messages of encouragement and rapport reached us. And to show how we value such spontaneous messages of appreciation and fraternity we print a selection of them in another column. They are words of encouragement to us all in the dreary times of the present and in the difficult and dangerous times ahead. They an an acknowledgment that our labour is not in vain. They fan the flame of our faith that the cause of the workers must triumph despite the difficulties and dangers that undoubtedly beset its path. We know that it is always darkest before the dawn. The intellect of the workers slumbers fitfully at present, but this cannot always be. The march of events, the pressure of economic circumstances, of the greed and callous brutality of the ruling class, will help to open their eyes and make them rise to an adequate conception of their great historic mission. Then we may say with Shelley, but with a deeper meaning to the working class:

"Rise! Like lions after slumber,In unconquerable number,Shake your chains to earth like dew That in the night had fallen on you.Ye are many, they are few.”