‘Our job is to work with businesses to create the best environment that allows them to thrive’. So wrote Starmer in an article in the Times (29 January). This describes perfectly one of the key roles of government under capitalism. Since businesses thrive by making profits and since business investment for profit drives the capitalist economy, the government has to do what it can to create and maintain good conditions for profit-making — and to avoid doing anything that might run counter to this.
Starmer understands that this is the logic of capitalism and, in office, is openly striving to apply it. It inevitably means putting profit-making first. Governments have to do this on pain of making things worse. Any party in office has to be the ‘party of business’ that the Labour Party said it was even before it was voted in.
Starmer’s understanding contrasts with the illusions of his left critics inside and increasingly outside the Labour Party. Here, for instance, is what Counterfire (an SWP breakaway) claimed in its January issue:
‘A genuine radical left government could make real changes now, by taking measures that both the centrist establishment and the hard right reject, such as taxing the super-rich, controlling rents and energy prices, and investing in infrastructure. The left can win the argument that society can, and should, do better’.
Of course society can do better, but not as capitalist society. The reference to the continued existence of the super-rich and rents and prices show that Counterfire is assuming that capitalism continues. So, it is in effect arguing that a government can make capitalist society better for workers. The left certainly has not won that argument. Left governments that have tried to do this — to put meeting people’s needs before maintaining the best environment for profit-making — have failed. In fact, they have tended to make things worse, and then be voted out of office.
Taxing just the ‘super-rich’ but not the profits of capitalist corporations, as essentially a tax on the consumption of the capitalist class, need not worsen the environment for profit-making. But if ‘taxing the rich’ extends beyond this to higher taxes on profits, the source of business investment that drives the economy, then the prospect of an economic downturn emerges. This is the point at which most left governments perform a U-turn. Otherwise they crash the economy.
Controlling the price of energy to consumers would bring some respite but, since governments don’t and can’t control the world price of energy, this could only be maintained through subsidies that would have to be paid for by increasing taxes. Whatever the government invests in infrastructure would have to come from taxation too, to repay any money borrowed and the interest on it. The higher taxes on, or passed onto, businesses would worsen the environment for profit-making.
Rent control might not crash the economy but it would create other problems. Businesses and individuals investing in letting houses and flats would invest less and spend less on maintaining their properties, with the longer-term consequence of fewer places to rent and deteriorating accommodation.
The lesson is clear. If you want better, better get rid of capitalism and not try to make it work in a way that it can’t.
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