Cooking the Books: A price worth paying? (2022)

The Cooking the Books column from the April 2022 issue of the Socialist Standard

‘The war in Ukraine will inflict an “economic cost” on the UK and worsen the cost of living crisis, Foreign Secretary Liz Truss has warned. But she suggested it was a price worth paying’ (i paper, 27 February). ‘The long-term defence of freedom’, she has also said, ‘is worth short-term economic pain’ (Times, 7 March).

‘Freedom’ is a nebulous concept that can mean anything and everything. On the surface, Truss appears to mean that Ukraine should be free to be a capitalist political democracy like in Britain and the EU countries. However, digging deeper, it turns out that she also means that Ukraine should be free to enter the Western capitalist bloc’s sphere of interest and not capitalist Russia’s.

In any event, whatever it is, there will be a price to pay for the economic sanctions that the government has imposed on Russia. When a state is in a war that threatens its existence, its capitalists have to make sacrifices so that their state survives. Normal profit-making and capital accumulation are subordinated ‘for the duration’ to the need to ward off or defeat the enemy state. It’s a price they consider worth paying.

Although Britain is not actually fighting a war, the government still considers that geopolitical interests are at stake that justify the imposition of the wartime-like economic measures that the sanctions against Russia amount to. Many capitalist firms will suffer ‘pain’ as a result in terms of a loss of profits and, more generally, a slower rate of capital accumulation.

Those capitalist corporations which trade or invest in Russia will lose profits from sales and investments there. BP, for instance, is said to suffer a loss of $25 billion on its investments there while Shell’s loss is said to be $3 billion; McDonalds’ probably rather less. Others will have to find alternative, more expensive sources of raw materials. All will suffer from higher energy – gas and oil – prices, which will increase their costs and cut into profits. With fewer profits available, capital accumulation is likely to slow down, even falter.

Capitalist corporations seem to be accepting, at least for the time being, the need to sacrifice some of their profits to stop Ukraine falling into Russian capitalism’s sphere of influence. But what about the workers?

There is widespread sympathy for the suffering of ordinary people like themselves in Ukraine – an expression of human empathy and solidarity – but agreeing to a further cut in living standards to arguably further the geopolitical aims of NATO is a different matter.

Truss admits that the sanctions imposed in Russia will ‘worsen the cost of living crisis’ here in Britain. Robert Lea (Times, 9 March) spells out what this involves:

‘Six million UK homes, one-fifth of its households, will teeter into heat-or-eat fuel poverty – and if domestic energy bills head towards £3,000 a year, it will be a case of neither heating nor eating.’

Not that the government is interested in the opinion of those it will cause to suffer. It has decided and that is that. Workers must pay the price, whether they like it or not. They always do under capitalism.