How we live and how we might live - Part 4 (2024)

From the December 2024 issue of the Socialist Standard

(Continued from last month)

In his 1884 talk, ‘How We Live And How We Might Live’, William Morris set out to describe what socialism can offer to working people that capitalism can’t. He began by inviting his audience to imagine a world without the miseries of poverty and war, curses that class societies like capitalism inflict upon us. In earlier articles in this series we explored how, in the modern world, the source of those ills lies in the deep structure of capitalism itself. This month we will explore those causes a little further and look at some of their consequences.

At the heart of modern capitalist societies lies a property system of universal competition based on the employer/employee relationship. This is a relatively recent development. Earlier ways of making a living by common access to the land or through small-scale craft work, for example, were largely extinguished as capitalism advanced and came to dominate Western Europe and America, and then later, the world. Today, everyone born into a capitalist society is forced to rely on the market to obtain what they need. According to their circumstances, they are forced into the role of an employer or an employee. If they are members of a cooperative or the owners of a small business, they must take on both roles, and manage the conflict between them.

Maximising profits

The aim of any capitalist business is to make a profit. It uses money capital to purchase materials, part-finished goods, machinery, office equipment, and other physical means of production. Crucially also, it buys human labour-power. It sets this and machinery to work on its purchased materials in order to produce goods for sale on the market. If the business has judged the market correctly, it will receive back from the sale of its products a sum of money equal to the capital sum originally advanced plus an additional amount — its profit — derived from workers’ labour. A portion of this money it will put into a fund for reinvestment in future production. Another portion will be used to pay taxes, rent and overhead costs like insurance. A third portion will be taken as revenue by the owners of the business or allocated as interest to shareholders.

If a business wants to stay in the market it must continuously receive back more money than it initially advanced. This is not just an aim but a necessity imposed by capitalism’s competitive property system. This additional sum, the business’s profit, is what allows it to grow. Growth, like profit, is not a choice, but a necessity enforced by the system. Let’s say our business owner has a very simple, inexpensive lifestyle (just for the sake of argument. Bear with us!). Could they not choose to keep their business small and make a minimal profit? For some small businesses who have found a niche market, that might be possible, at least for a while, but capitalism is a competitive society. Businesses compete for the money in your pocket. They know that if they do not grow by introducing labour-saving machinery, for example, or by taking advantage of economies of scale, then their competitors will, and they will be in danger of being priced out of the market. Competition drives growth in a capitalist economy.

To ensure that businesses stay competitive in the market, they must not only grow, but they must also maximise their profits. If at any time our frugal business-owner needs to replace less efficient or worn-out equipment, their low profit levels could well be a liability. If they need to borrow for this same purpose or simply to bridge the gap between investment and return, they may find themselves in difficulty. Lenders and investors aim, like other capitalists, to maximise their revenue, and will not be attracted to invest in businesses which cannot pay a going rate of interest. Thames Water, in the UK, is currently in just such a quandary. It is in dire need of inward investment, yet its inability to generate sufficient profit in the future has led its potential investors to declare it ‘uninvestable’.

To maximise income, businesses need to minimise their costs. In particular, they need to minimise their labour costs by keeping down their workers’ wages. Capitalist competition tends to result in businesses each making the same average rate of profit with respect to their invested capitals. By lacking direct competition, however, near-monopolies and cartels can often raise their individual rate of profit above the average. Exceptionally innovative businesses like those in the high-tech sector can often do the same, at least temporarily. Raised profits in these industries give their highly trained and creative workers scope for negotiating higher wages, especially, as is often the case, if their skills are in short supply on the labour market.

Below average

The bigger the front, however, the bigger the back. While some businesses can raise their profits above the average, others must operate below it. These need to keep wages down more firmly. Businesses of this sort often rely on a lot of partially skilled labour, which is often more plentiful and cheaper to buy in the market place. To get the maximum productivity out of their workers for minimum cost, their work regimes are often pressured, tedious and exhausting, leaving employees dispirited and lacking in self-esteem. Businesses of this kind tend to rely on a heavy disciplinary management style. They can demand long, irregular or unsocial hours of work. And if the law of the country permits, they tend to provide low levels of sick and maternity leave, and scant holiday pay. They often provide workers with little training or career development, giving them fewer chances to better their situation. When the market is in one of its cyclical declines and profits fall, their workers, being easily replaceable, are quickly laid off and find themselves surviving on minimal state benefits or, in the worst case, unable to pay rent and becoming homeless. And so the downward spiral continues.

Workers living on the poverty line and with few prospects sometimes gravitate towards the informal ‘black’ economy. This consists of businesses often operating in a highly competitive market that are fighting to minimise costs. Under these conditions, operating outside the law becomes a risk worth taking. For workers this has some advantages. If they get paid ‘under the table’ they can avoid deductions for tax and national insurance. The downside is that such companies tend to pay low wages, offer no training or possibility of advancement, and provide no arrangements for holiday or sick pay or other statutory benefits.

Another possibility which has always been an option for those with low skills and poor prospects is the criminal economy. For men, today, this generally means theft or burglary, or selling drugs. Most thieves are young men with few saleable skills. Despite the glamorous image perpetuated by heist films, a life of crime for most has few real rewards and the chances of getting caught are high. Selling drugs on the street is often gang-related and dangerous. And for the average dealer it nets little income. For women, entering the criminal economy generally means sex work or shoplifting where the prospects are even worse. Voluntary sex work is inherently dangerous. It is often illegal and dominated by pimps who skim off significant portions of a woman’s earnings. Shoplifting is stressful, provides low levels of income and again carries a high chance of arrest.

Race to the bottom

Poverty is not an unfortunate accident. It is a built-in feature of capitalism’s competitive property system and its employer/employee relationship. Businesses maximise profits by holding down wages, but they will take whatever means they can find to minimise costs. They will use cheap materials in their products like non-biodegradable plastics, or they will externalise costs by pumping waste into rivers and into the atmosphere. And just as the need to minimise costs drives pollution, so the competitive pressure towards growth fuels climate change. Damage to the human and natural environment is also a built-in feature of the capitalist system.

In 2005, Gordon Brown, then UK Chancellor of the Exchequer, commissioned Nicholas Stern to conduct research and report back on how moving to a low-carbon economy in the UK might be managed. The Stern Review, when it was finally delivered in October of the following year, was a vast, 700-page monster of a document. It has since spawned a significant academic industry. Today, however, its arguments seem ridiculously optimistic. It concluded that if states were to cooperate, the drivers of climate change could be economically managed, and CO2 levels kept below a threshold that at that time was thought to be sustainable. Skimming through its summary today, what stands out is the political naiveté on which it rested, its entire weight pirouetting on one tiny, innocent-sounding word: ‘if’ – ‘If states collaborate…’

Capitalism is not a collaborative system, nor is it designed to solve common problems. It is a system of ruthless competition. In the years before and since The Stern Review it has demonstrated over and again just how impossible it is for capitalist states to achieve the level of international cooperation Stern hoped for. Every year since 1995 thousands of scientists, politicians, and ‘stakeholders’ have sat closeted together in the UN’s COP meetings, thrashing out the issues. The effective outcome of all this activity has been negligible. Beyond a legally binding commitment of each participating country to implement its own greenhouse gas reduction measures, little has been achieved. Globally capitalism is still pumping CO2 into the atmosphere like there is no tomorrow. This year alone, CO2 levels have been soaring.

In 2013, George Osborne, Chancellor of the Exchequer in the Cameron government, summarised the problem in a carefully worded statement: ‘I want to provide for the country the cheapest energy possible, consistent with… playing our part in an international effort to tackle climate change. But I don’t want us to be the only people out there in front of the rest of the world’. And there we have it. Cheap energy is the key to keeping businesses competitive in the global marketplace. In a world of international competition, no country can afford to commit to using more expensive forms of energy unless all do. Finding anything but the loosest and most ineffective agreements on this issue has proven impossible. At the opening of the 29th meeting of COP last month in oil-rich Baku, Azerbaijan, Simon Stiell, the Climate Change Executive Secretary for the UN, made yet another plea for international cooperation to stem the rise in global temperatures. It is a plea that over thirty years has yet to generate meaningful results.

And so, here we are. War, poverty, pollution and climate change are just a few of the features damaging human life and disfiguring our world, all of them rooted in capitalism’s wage-labour/capital relationship which sits like a supermassive black hole at our economy’s galactic core. The only real and permanent solution to capitalism’s woes lies in its elimination. Yet, what kind of a society would that produce? In his talk 140 years ago last month, William Morris considered what kind of a world might result from eliminating capitalism’s class society. Yet we can ask, what would such a world look like in its own terms, and what might we be able to say about it? Is it feasible? How would it operate? These are the questions we will turn to next month in the Socialist Standard.

Hud.

Link to Part 5.

Greasy Pole: It’s A Date, Then? Or Not? (2007)

The Greasy Pole column from the November 2007 issue of the Socialist Standard

That was the month that was. In September Gordon Brown celebrated his first speech to a Labour Party conference as Prime Minister by dragging out a procession of exhausted platitudes about the glories of being British and having a Labour government to stop you forgetting it. Soon afterwards a majority of the people who can be bothered to answer the questions of opinion pollsters said that, if given the chance tomorrow, they would vote for another spell of Labour government provided it could be under Gordon Brown. Understandably encouraged by this, Labour’s propaganda machine planted a rumour that Brown would call a general election for 1 November. This was startling news; don’t these people who start rumours know that 1 November comes immediately after Halloween, so that election canvassers were in danger of being confused with kids dressed up as skeletal witches frightening old ladies on their doorsteps with demands for trick-or-treat under threat of having their front gardens vandalised?

Luckily the Tory conference, following hard on the heels of Labour’s event, went some way to putting things to rights because George Osborne, who threatens to be the next Tory Chancellor of the Exchequer, did a trick-or-treat on Brown by declaring that when he was in charge at the Treasury only millionaires would be liable for inheritance tax. The dullards who are bothered to be so loyal to the Conservative Party that they turn up at their conferences were ecstatic about this promised financial tinkering to the extent that they failed to notice that Osborne had also put down a marker to be the next Tory leader if the party ever gets fed up with Cameron’s touchy-feely, hoodie-hugging, I-luv-u-babe style of deception. Cameron pitched in with a speech even heavier laden with platitudes than Brown had managed, on the excuse that his speech “may be muddled but it is me” – which, it must be hoped, will not pioneer endless hours of drivel by any leader who confesses to being me. A lot of easily impressed people who had once bothered to tell the pollsters that they would vote Labour changed their mind so that Brown decided it would be wise to abandon the idea of a post-Halloween election, leaving him free to take his kids out trick-or-treating. The Tories were incensed that a party leader could change the polling date to improve their chances of winning, spluttering that this was a diabolical plot, not only to disrupt the winter festivities but also to subvert the democratic process.

Eden

Even by the lax standards of political parties the assumed Tory indignation at the possibility that Brown would fix an election date to suit his party’s interests is suffocatingly audacious. Both parties have adopted the same stratagem; indeed it is rare for a government to run its full course of five years. For the  Conservatives, Anthony Eden succeeded Churchill as Prime Minister, after a long, frustrating wait which did nothing to soothe his naturally impetuous temperament, in April 1955. In fact, although the succession had been widely assumed, it was not as smooth or as predictable; Lord Swinton, one of the grander of Tory grandees, told Churchill that Eden “would make the worst Prime Minister since Lord North” and Churchill morosely agreed that he thought it had been “a great mistake” to announce his successor so long ago. The Labour Party, exhausted and shattered by the stress of their participation in the wartime coalition and split by the controversy surrounding Aneurin Bevan, were a long way from offering a realistic option as a government while the Conservative benches were thick with young, thrusting, ambitious newcomers to the Westminster jungle. Political strategy demanded that Eden call a quick election, to exploit the contrast between the ailing, often absent, Churchill and himself as a dashing, handsome, charming ex-Guards officer. After some dithering, notable for the display of the most lurid of his tantrums, Eden decided for an election in May, a year before he had to. Against the Labour Party as it was then, it could hardly be called a gamble; the voters, perhaps in gratitude at having this scion of innate ruling class superiority ordering them about, returned Eden’s government with its unsafe majority of 16 increased to a relatively secure one of 58.

Suez

In fact Eden’s government was notable, not for its chivalry but for the chaos and deceptions of the Suez invasion. This episode in cynicism, although typical of capitalism’s politics, did not seem to inflict any long term damage on the Tory Party for Eden’s successor Macmillan constructed an increased majority for them at the 1959 election. It was an uncomfortable fact that, among their confusion, the working class showed no reluctance to pursue an outdated dream of the glory days of British imperialism during which deranged and treacherous foreigners like Colonel Nasser were unwaveringly taught to keep their place. These unhelpful, insupportable prejudices blossomed again in 1982, when the Thatcher government blanketed a number of inconvenient historical facts to justify their intention to eject the Argentinian forces from the Falklands. Satisfactory as this was at the time to the Iron Lady its full value was not revealed until she had to settle on the date of the next general election – the first test of her record since she came to power in 1979.

Had Thatcher’s government served its full term they would have gone to the polls in May 1984. But the prospects for that date were unpromising. The early 1980s were not favourable to the Tories, marked by economic problems – at one stage there were 3 million registered unemployed – showing up in a series of bad by-election results in constituencies like Croydon North West and Crosby, where the former Labour front bencher Shirley Williams won with nearly 50 per cent of the vote for the SDP. In some cases the Tories were left struggling in third place. Things did not look good if they waited for a 1984 election, in the hope that something would turn up. And something did turn up – apart, that is, from the Labour Party electing Michael Foot as their leader. But the crucial event was the Falklands; when, in June 1982 the British forces sailed triumphantly home, leaving behind their dead and their sunken ships, Thatcher was quick to put the war in the most favourable light for the Tories:

“We have ceased to be a nation in retreat. We have instead a newfound confidence – born in the economic battles at home and tested and found true 8000 miles away…we rejoice that Britain has rekindled that spirit which has fired her for generations past and which today has begun to burn as brightly as before.”

Vote

And after that it seemed absolutely unavoidable that she would apply the heat of that newfound spirit to roast the Labour Party in a general election. In June 1983, a year before the government’s full term was up, the Tories romped home with a record majority of 144. Michael Foot’s Labour Party hit its lowest point since the defeats of the 1930s. All things considered, for Thatcher and her party an example of skilful timing, helped by a bit of luck and some hundreds of dead people, who had not been so lucky.

A governing party is absorbed in the timing of an election on the assumption that if they get it right their vote will be significantly higher. But what does this say about the people who vote? Are they content to use their power to bring about the trivial, short-lived changes which concern parties like Labour and the Tories rather than to erect a fundamental, enduring social revolution to consign capitalism to its unhappy history? Are they happy to so misuse their power that they oppose the Tories when unemployment is high but support them after a victorious war? Are they satisfied to use their vote to repress themselves rather than for their freedom?

Ivan

Cooking the Books: Debts and Doubts (2011)

The Cooking the Books column from the August 2011 issue of the Socialist Standard

The public sector union UNISON has provided its activists with briefing notes on the economic crisis, based on the illustrations used in a talk by Barry Kushner that can be found on YouTube.

 

He shares the illusion that the economy is a tool which governments can manipulate to ensure growth or more equality (or less equality) or whatever. In other words, he ignores the fact that the profit-motivated market economy that is capitalism is governed by economic laws which governments have to accept and apply if they don’t want to provoke an economic crisis.

 

This said, he does make some valid points about the scare stories about the National Debt put out by the present government to justify its austerity programme.

 

The National Debt is the government’s debt and has nothing to do with the debt of the individuals who make up the supposed “nation” (it is not the total of private debts). As such, it is better called the Government Debt (its official name is “Public Sector Net Debt”). Similarly, the Deficit is the government’s. It’s the difference between what it raises through taxes and what it spends, which it has to cover by borrowing. What it spends includes the interest it has to pay on the Government Debt.

 

“We are told,” says Kushner, “that our country was nearly bankrupt, that our debt payments are £120 million per day, that our debt is nearly £1 trillion” and quotes George Osborne as saying on the Andrew Marr show that “we were on the brink of bankruptcy” and another government statement that “our debt is higher than it’s ever been.”

 

The Government (not “our”) Debt is only higher than it’s ever been in nominal (face value) terms, only because £1 trillion today is not the same as £1 trillion in the past. Kushner points out that the usual way of measuring the level of the Debt is to compare it with Gross Domestic Product (basically the value of new wealth created in a year). At the moment, this ratio is around 60 percent. One of Kushner’s graphs shows Government Debt as a percentage of GDP from 1900 to 2010. From 1920 to 1960 it was consistently well over 100 percent; just after WW2 in 1945 it was 261 percent. In other countries it is much higher: 100 percent in the US, 200 percent in Japan

 

The government does not need to be in a position to pay off the whole Government Debt in one go. Since about 80 percent of GDP is made up of what people consume and what the government spends on essential services, 60 percent could not be devoted to repaying the Debt in one year without mass starvation. Most of the Debt is continually renewed as those lending the money to the government want to keep on receiving the interest.

 

Interest payments on the Government Debt are £120 million a day but, at £43.3 billion a year, this is less than 3 percent of GDP, which is easily affordable. Kushner points out that in 1981, under Thatcher, interest payments were in today’s money £174 million a day or over 5 percent of GDP, adding that we “didn’t hear talk of bankruptcy then”.  According to www.ukpublicspending.co.uk/uk_debt, “experts say that when interest payments reach about 12% of GDP then a government will likely default on its debt”. As just seen, the British government’s payments are nowhere near this figure. 

 

There never was any danger of bankruptcy. Osborne was just scaremongering to justify cutting government spending for other reasons. The cuts are being made to try to restore profitability. It’s because saying this openly would not go down well that the government has resorted to the scarce stories and lies about bankruptcy, unsustainable interest payments and the like.

Editorial: Profits Before People, Again (2012)

Editorial from the April 2012 issue of the Socialist Standard

At least the Coalition government knows how capitalism works –it runs on profits, so priority must be given to profitability and profit-making. It’s written all over their economic policies and was confirmed in last month’s budget.

The only way capitalism gets out of a slump is when profit-making opportunities reappear. When they do, “growth” resumes. This means that, in a slump, any government must not do anything that will adversely affect profitability and profit-making prospects. Just the opposite, it must encourage these. That is, if it is going to do anything. Another option is to simply let spontaneous economic forces operate to restore profitability, as through unprofitable firms going bust and their assets passing cheaply to their rivals and increased unemployment pushing down wages.

A government can help restore profitability in two ways. It can reduce taxes on profits.  In the budget, for the second year running, the Chancellor announced a cut in corporation tax, a direct tax on profits. This reduces government revenue, which means that it has to cut back on some of its other spending, as the present government is doing with a vengeance, forcing local councils to reduce public amenities and slashing payments to those who can’t find or who are unable to work. With more to come.

The second way a government can help restore profitability is to reinforce the downward pressures that mass unemployment exerts on wage levels. Two recently announced measures openly proclaim this as their aim.

The Chancellor confirmed that national pay bargaining for public sector workers is to be replaced by regional bargaining on the grounds that the present system results in wage levels in some regions being too high, so high that to attract workers employers have to pay higher wages than otherwise. The aim of regional pay bargaining is to reduce wages –and so boost profitability –in areas of the country where public service workers are considered to be overpaid.

The minimum wage is to go up in October but by only half the rate of price increases. So, it’s going to be reduced in real terms. For those under 21, the rate is not going to be increased at all. Business Secretary Vince Cable justified this on the grounds that it would make it easier for young people to get a job, i.e. the lower wage is aimed at boosting the profit prospects of firms employing workers on the minimum wage.

But what about taxes on the rich that have also been announced? That’s a side-show. “Tycoon taxes”, “mansion taxes” and the like are not taxes on profits, but taxes on the consumption of the capitalist class. A government can safely increase them in a slump as they don’t affect profitability. This even has the political advantage of allowing them to justify the austerity measures imposed on the rest of the population as “fair” as even the rich are effected.

It is true, though, as the Labour Opposition has been quick to point out, that this propaganda ploy has been rather undermined by the government’s reduction of the rate of tax on incomes over £150,000 from 50 to 45 percent, supposedly to attract overseas businesspeople to come to invest in Britain. But, as the traditional party of the rich, the Tories can’t clobber their clientele too much.

There is no alternative under capitalism. As long as capitalism lasts all governments have to pursue a policy of giving priority to profits. Profits before people is the rule. It’s why we need socialism.

Action Replay: Inheritance Tactics (2012)

The Action Replay column from the November 2012 issue of the Socialist Standard

We were assured that it was also about what happened after the frantic few weeks of competition: “As well as the physical legacy of the London 2012 Games … new initiatives and programmes are creating sustainable social, economic and sporting legacies at home in the UK and around the world” (http://www.london2012.com/). But there are many reasons for thinking that the Olympics and Paralympics won’t quite be the success the organisers had in mind.

For a start, the Games themselves are unlikely to do more than break even, which makes earlier spats about how to share out the profits look beside the point.

Shops did not do well, either. Sales overall fell during the Games period according to the British Retail Consortium especially in central London where transport and other problems led many people to stay away. Free parking was introduced in the West End for a couple of weekends to try to reverse these trends. Hornby lost £1m on their Olympic-branded toys, after “retailers lost confidence in many categories of London 2012 merchandise”, as the company put it.

Even hotels, theatres and restaurants fared badly as people stayed away from London, fearing overcrowding and inflated prices. Tourism in other parts of Britain suffered too, as tour groups that might have visited London and, say, the Lake District, preferred not to come to Britain at all.

As for the sporting legacy, the vast sums spent on top athletes were not matched by similar largesse for facilities aimed at ‘the public’. Almost two-thirds of adults don’t take part in sport even once a week, and current austerity cuts are reducing sporting facilities even more. George Osborne was booed at the Paralympics as the government sets out to replace the Disability Living Allowance with even stingier payments.

With London mayor Boris Johnson having put himself in charge of future developments at the Olympic Park, no doubt what happens there will be a combination of making a profit and providing a chance for yet more self-publicity.

Paul Bennett

Cooking the Books: Clueless (2012)

The Cooking the Books column from the January 2012 issue of the Socialist Standard

One of the first things George Osborne did on becoming Chancellor in May 2010 was to headhunt a whizz-kid economic forecaster to head a new Office for Budget Responsibility (OBR). For Osborne’s 2010 budget the OBR forecast that GDP would grow by 2.3 percent in 2011. It also made forecasts for the years up to 2015. We commented in this column in August 2010:

  Long-term predictions are even less reliable. Even so, the OBR has indulged in this, predicting (and we record the figures for future reference) that in 2012 growth will be 2.8 percent, in 2013 2.9 percent, and 2.7 percent in 2014 and 2015. This is not worth the paper it’s written on. It’s like the Met Office predicting a barbecue summer in two years time.

In his Autumn Statement on 29 November Osborne revealed that the OBR had gone back to the drawing board and come up with some new figures:

  They expect GDP in Britain to grow this year by 0.9% – and by 0.7% next year. They then forecast 2.1% growth in 2013, 2.7% in 2014, followed by 3% in 2015 and 3% again in 2016.

Given the unpredictable nature of capitalism, the chances are that the figures for the years after 2012 will turn out to be just as wrong.

The day after the Autumn Statement, there was a one-day public sector general strike. For the occasion, the Morning Star, which is close to the “Communist Party of Britain” (the nearest thing to the old “Communist” Party), brought out a special, free edition. It contained an article by Jerry Jones, the economic expert of the Morning Star and CPB, which revealed that those at the opposite end of the political spectrum to Osborne are just as clueless.

The CPB claims to be Marxist but Jones’s analysis was not based on Marx’s view that what drives the capitalist economy is investment by capitalist enterprises in search of profit. He argues that, on the contrary, capitalism is motivated by “economic demand” as if it were a system geared to what people want to buy; and that the current economic crisis is not a lack of profits but a lack of paying demand.

From this faulty analysis his faulty conclusion follows: that the state should invest in new productive activities, so putting money into workers’ pockets and increasing economic demand that way. This is Keynes rather than Marx, but where’s the state to get the money to invest? Easy:

  The fact is that governments could simply tell their central bank – the Bank of England in Britain’s case – to print the money or its electronic equivalent and hand it over to the government to invest.

Jones himself then poses the question: “But doesn’t ‘printing money’ cause inflation?” He answers “No” on the grounds that the “true cause” of inflation is not “too much money floating around” but is “always insufficient supply, or investment, to meet growing economic demand.”

But, in the end, this is the same thing. The price of any good will go up if the paying demand for it exceeds its supply but, since paying demand is generated in production, the only way that total demand can come to exceed total supply (Jones’s assumption) is by it being inflated by the government “printing more money” (more accurately, printing more money than the economy needs).

The inflationary policy advocated by Jones might temporarily induce some increased production but would eventually lead to “stagflation”, as it did when tried in the slump of the mid-1970s. The Morning Star’s Keynesian reformism is not a viable alternative. Only socialism is.

Brexit, Schmexit (2018)

From the December 2018 issue of the Socialist Standard

So, with only a few months till Brexit Day, the government (or most of it) has agreed with the EU on the terms of a withdrawal agreement. As previously negotiated, there is to be a transition period of 21 months between 30 March next year and 31 December 2020 during which the UK will remain in the EU’s customs union and single market but with no say in any decisions about them; which Boris Johnson has described as being a ‘vassal state’, even though he was Foreign Secretary when this  was agreed.

The intention is that during this period the two sides will agree a final settlement on the future trading arrangements. If they are unable to, then, again as previously agreed, there will be a ‘backstop’ to prevent a hard border, i.e. with customs checks, being re-erected between the two parts of Ireland.

The only new element is the terms of this backstop, with the EU insisting on safeguards to, in the event of no future trading agreement, prevent goods from the UK which don’t meet the rules of the single market sneaking into it by this backdoor. It is this last that the extreme Brexiteers object to as a means of sabotaging the agreement. As do the DUP on the grounds that this would mean a different, however slight, trading arrangement with the EU for Northern Ireland.

The negotiations are all about trading arrangements and, as such, don’t concern the majority class of wage and salary workers. So we can let the capitalists and their political representatives settle the matter and observe who wins between the dominant section who want as similar a trading link with the EU as now (and who never wanted to leave anyway) and those that George Osborne, now editor of the London Evening Standard, has called ‘those naive business leaders and hedge fund managers who thought that the dispossessed of our industrial towns were voting with them for Britain to become a Singapore in the North Sea’ (14 November). We can also watch with amusement the Tory party tear itself apart over the issue.

We would only be affected in the event of the capitalist class’s political representatives not being able to settle the matter, resulting in the UK crashing out of the EU without any agreement. This is unlikely but, if it happened, our lives would be temporarily, and from our point of view unnecessarily, disrupted. In Northern Ireland the Border with a capital B would be restored with all its negative effects on working class thinking, not to mention Irish Republican action, there.

One thing we don’t want, thank you, would be the matter to be referred back to us in a second, irrelevant referendum. Why should we be asked to settle an argument between our masters which doesn’t concern us?

Cooking the Books: Going for Growth (2012)

The Cooking the Books column from the September 2012 issue of the Socialist Standard

When Mervyn King announced on 8 July that the Bank of England was predicting zero growth for 2012, Chancellor George Osborne pledged that the government would now devote a 110 per cent effort to creating growth. But how?

Growth is defined as an increase in Gross National Product (GNP). This is made up of three things: business investment, government expenditure and consumer spending. So, in theory, growth could be brought about by increasing any of these. In practice, however, it can only come about through an increase in business investment. This is because this is what drives the capitalist economy, but it only takes place in the pursuit of profit. When it contracts or stagnates this is a sign that profitability has fallen. Growth won’t take place again till this is reversed.

When there is a slump the obvious solution seems to be to increase consumption by giving people more money to spend. Keynes wasn’t so naïve but he did provide an economic theory that justified doing this. So it is fair to say that the Keynesian solution to a slump is that the government should intervene to increase both its own spending and consumer demand.

When this was last tried in Britain by the Labour governments of the 1970s it didn’t work, but merely led to “stagflation”, i.e. rising prices but no growth. The then Labour Prime Minister, James Callaghan, had to confess at the 1976 Labour Party Conference:

“We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour, that that option no longer exists and that in so far as it ever did exist, it only worked on each occasion since the war by injecting bigger doses of inflation into the economy, followed by higher levels of unemployment” (Times, 29 September 1976).

The fallacy behind this policy, still advocated by Labour left wingers and the Green Party, is that it assumes that capitalism is an economic system geared to meeting paying consumer demand whereas it is in fact an economic system geared to making profits to accumulate as capital. Profits are the key to growth not government and consumer demand.

In a slump there is a fall in consumer demand but this is a consequence of an increase in unemployment due to a fall in profitable investments. This is why government action to increase demand does not work. Only an improvement in profit prospects, leading to an increase in business investment, will bring about an inevitably gradual exit from a slump. Various things that happen in a slump help to bring this about. Lower wages, lower interest rates, a fall in the value of fixed assets and the elimination of unprofitable firms all help to restore profitability. So does a reduction in taxes. In fact, insofar as a government does not decrease its spending and so taxes to finance it, this can prolong a slump.

To apply Keynesian remedies in a slump could even make things worse. Not that the present government has any intention of doing this. They can pledge to “go for growth” as much as they like but unless profits recover there will be no growth.

Greasy Pole: Theresa - Strong And Stable (2017)

The Greasy Pole column from the July 2017 issue of the Socialist Standard

We were told that Theresa May decided, flushed with optimism, to hold a general election on June 8 when she was hiking with her husband through Dolgellau, a small market town lying at the base of the Cader Idris range in Snowdonia. Dolgellau was once a woollen town but it was taken over by the automatic looms. Now it relies on tourists, who walk and climb or stay at the hotels there. When May was a small toddler a group of Socialist Party members climbed to the summit of Cader Idris, where one of them who was pregnant stood deeply awestruck by the view. That evening in the hotel there was a lot to be discussed – such as capitalism’s abuse of the world’s beauties, like the political conceits of the system’s rulers to the misery of its people. For May it is rather different now from her relaxed stroll through Dolgellau.

Speaking Out

One who would have been particularly interested in that discussion was Ed Balls, whose book – Speaking Out – has recently been published. This is an account of his political experiences including a previous election when, according to Balls in an advisory mood: ‘What we badly need in Britain is a return to the sort of leadership exemplified by Margaret Thatcher as Prime Minister and Gordon Brown as a Chancellor…’ without speculating on how this proposed combustible partnership might have operated. Speaking Out is about Balls’ time as an Oxford undergraduate, then as an economist at Harvard followed by the Financial Times and a place at the Treasury until with the election of the Labour Government under Tony Blair and Gordon Brown a succession of ministerial posts preceded the defeat of that government and had him emerging as shadow Chancellor of the Exchequer.

PMQs

That was when he achieved a kind of notoriety appearing on the TV screens exchanging insults and indecipherable hand gestures with David Cameron during Prime Ministers Questions – which entailed the exposure of Cameron to lasting scorn among the fans by mistaking West Ham for Aston Villa. Those broadcast clashes earned Balls a reputation as a left-winger inspired by a passion to help establish a more equal society. Except that he denied this with his very own words: ‘But being Labour doesn’t mean that I can’t also believe in a market economy which creates wealth and good jobs . . .  you couldn’t build a stronger economy on a fairer society through opposing business; it had to be a partnership between the dynamism of business and the helping hand of government. And my arrival from the Financial Times, the pink-papered global business newspaper, to work for Labour in 1994 was one symbol of that change they were pursuing’.

Osborne

This was a preamble to Balls’ next, heavily publicised, ambitiously gratifying, personal appearance on TV when as the news came in late on polling day he picked over the tastier morsels with George Osborne. It was not comforting for Theresa May – but then how was Osborne to react when one of her first responses to becoming party leader was ruthlessly to eject him from being Chancellor of the Exchequer – even if he could then take his revenge as editor of the Evening Standard? And in any case May herself had never hesitated to make enemies. Apart from her infamously informing the Tories that they were better known as The Nasty Party there was the matter of her costly tastes in clothes, like a ‘Deliciously Soft Escada Cashmere Coat’ priced at £1950 and her revealing underwear such as headlined by the Express as ‘The Day Theresa May’s Boob-Busting Bra Sparked Twitter Meltdown’.

Paisley

Walking that day with her husband through Dolgellau Theresa May could feel easy about fixing the date of the election. She had cleared a number of rivals out of the Party, leaving her supreme to assure the voters that she alone would ensure Strong Stable Government. She would see off Jean-Claude Juncker along with those other tiresome European mediocrities. The Tories were a long way ahead with every opinion poll, leaving Jeremy Corbyn behind in what seemed a swamp of defeat. But as the campaign got under way another, profoundly unsettling, picture emerged. And when it came to that fateful day Jeremy Corbyn was returned in his constituency with 73 per cent of the vote and the Labour Party gained 30 seats. After all those confident boasts May’s party did not have enough MPs to set up a government. There was plenty of advice and predictions. In the end she turned up with yet another surprise by announcing that, along with her guilt and despair about the outcome of her campaign she would ensure that at least she could be at the head of a government, even if it entailed being in alliance with the Democratic Unionists – Ian Paisley’s original sprouting in Northern Ireland.

Crackpots

The DUP was formed in 1971 and has survived during various disciplines of militarism known as The Troubles. It is now the largest party in the Northern Ireland Assembly and its ten seats at Westminster make it the fifth largest in the Commons. But as it was typically known as ‘a coalition of crackpots’ it seemed unlikely that May would aggravate the chaos in her party by trying to survive as a government with their support. But that is what emerged from the chaos, with May as the titular leader of a minority government intended to operate on only ‘matters of mutual concern’, which left her enemies to speculate hopefully on exactly how it could fail. There is no lack of evidence that this will happen, if only in the recorded attitudes of the DUP leaders. One is in the Caleb Foundation opinion that the origins of the Earth – by god over six days – should be taught in schools. The party is hostile to LGBT groups and opposed to same sex marriage: ‘Peter will not marry Paul’. Northern Ireland is the only place in the UK where it is illegal to have an abortion, with a prison term of life for cases of drug-induced abortion. In December 2015 Arlene Foster became the party leader but in January 2017 she had to step down from the post of First Minister after presiding over a disastrous Renewable Heat Incentive Scheme costing the Budget some £400 million and ensuring that Theresa May’s effort to survive through an alliance with the DUP would look very unlikely. Which should divert us no more than on that long gone day on the Welsh mountain.

Ivan

Cooking the Books: George Osborne, Paul Mason and Marx (2016)

The Cooking the Books Column from the April 2016 issue of the Socialist Standard

Speaking in the House of Commons on 1 March George Osborne called the journalist and broadcaster Paul Mason a ‘revolutionary Marxist’.  To which Mason indignantly replied:

‘As to Mr Osborne’s claim that I am ‘revolutionary Marxist’ it is completely inaccurate. I am a radical social democrat who favours the creation of a peer-to-peer sector (co-ops, open source, etc) alongside the market and the state, as part of a long transition to a post-capitalist economy. There’s a comprehensive critique of Bolshevism in my latest book, Postcapitalism: A Guide to Our Future.’

Mason wasn’t always a critic of Bolshevism. For many years he was a member of Workers Power, the Trotskyist  group that calls for a ‘Fifth International’ (not that that made him a revolutionary Marxist either, just an insurrectionary Leninist). This may have been what Osborne had in mind. If so, this would be unfair since Mason left Workers Power years ago. In fact during a time when Mason was a Trotskyist Osborne was a member of the notorious Bullingdon Club. What is that they say about people in glass houses . . ?

More likely is that, in Osborne’s eyes, anybody who criticises capitalism, as Mason has done, is automatically some sort of a Marxist. But, as Mason made clear in his reply, he is not a revolutionary, but wants only to gradually reform capitalism into something else, as the Labour and European Social Democratic parties used to.

Marx was a critic of capitalism but he had no illusions about it being possible either to make it work in the interest of the non-owning, producing majority or to gradually reform it into something else. He advocated the winning of political power to use this to uproot capitalism and bring in what he variously described as ‘a co-operative society based on the common ownership of the means of production’,  or ‘co-operation and the possession in common of the land and the means of production produced by labour itself’, ‘a community of free individuals, carrying on their work with the means of production in common’. In short, the use of political power to carry out such a revolution in the basis of society.

In this sense ‘revolutionary Marxist’ is a tautology, but Osborne will have added ‘revolutionary’ to suggest that Mason favoured violent insurrection as he would know that this is what many people understand by the word. William Morris had already dealt with this as long ago as 1884 when he wrote that ‘the word Revolution, which we Socialists are so often forced to use … does not necessarily mean a change accompanied by riot and all kinds of violence’ and that ‘we use the word revolution in its etymological sense, and mean by it a change in the basis of society’.

Marx did not analyse capitalism with a view to coming up with policies for governments to adopt. He had no advice to give on this as his analysis showed that there was no policy governments could pursue that would make capitalism operate for the benefit of the non-owning majority. That is why he advocated the working class take political action to revolutionise the basis of society.

Cooking the Books: The Face of Capitalism (2016)

The Cooking the Books Column from the March 2016 issue of the Socialist Standard

'I find it terrible that we allow companies to behave like this', an unnamed Tory minister told Times columnist, Rachel Sylvester (26 January) commenting on the Google tax row.  'It gives capitalism a bad name'. It's the 'unacceptable face of capitalism' all over again (as if capitalism had an acceptable one).

But those in charge of Google and other corporations operating in many different countries did nothing against either the economic logic or the legal code of capitalism. Capitalism's economic logic is to maximise the 'self-expansion of capital', i.e., to make as much profit as possible to invest as more capital, and it is the legal duty of those in charge of investing other people's money to ensure that the investors get the maximum return on their investment.

So why the complaints from supporters of capitalism? They come from two sources. From those who support capitalism generally and from other capitalist firms.

Capitalism in Britain exists in the context of political democracy, which means that political parties openly supporting capitalism have to be able to command a wide degree of popular support. The Tory Party, which in Britain is the party of Big Business and the rich, cannot just baldly proclaim that it exists to act in the interest of the few before everyone else's. They have to convince people that capitalism is in the general interest. This is why the Tory minister was worried about the behaviour of certain capitalist firms giving capitalism a bad name. As are pro-capitalist journalists such as Sylvester who headlined her article 'Tax-lite companies are a cancer in capitalism.' So, the argument is advanced that such behaviour is not routine for capitalism but 'irresponsible', 'unacceptable' and even 'unethical' (as if capitalism has anything to do with ethics).

The capitalist groups which complain about Google's behaviour are those who feel that, due to Google's tax dodging, they are having to bear a disproportionate share of the burden of taxation imposed to maintain the capitalist state machine. The less Google and the others pay, the more the rest have to. Basically, it's UK-established firms versus overseas-established ones. Another Tory minister, Business Secretary Sajid Javid, well expressed the first group’s complaint:

'I speak with thousands of companies – small, medium-sized as well as of course large companies – and there is a sense of injustice with what they see. They do look at this and they say: “Look, I don’t operate all these multiple jurisdictions around the world. I can’t shift profits around. What about me? Where’s the level playing field?” ' (Daily Telegraph, 31 January).

Tory backbencher David Davies spoke up for them too, or at least for the smaller firms among them, when he told Sylvester:

'It gives big companies an advantage over smaller ones – that's not capitalism, in fact it's anti-capitalism.'

It's not 'anti-capitalism’ of course. Big companies always have the advantage under modern capitalism. As Marx pointed out, there’s a built-in tendency under capitalism towards bigger firms as these are necessary to control the ever larger and more productive instruments of production in which, in search of greater profits, new capital is accumulated.

It is true, though, that the burden of taxation can be distributed differently among the different sections of the capitalist class. This in fact is what the argument here is really about – how much each section of the capitalist class should pay towards the upkeep of their state. It's a purely intra-capitalist dispute of no concern to the majority class of wage and salary workers which we don’t need to be drawn into by taking sides.

Cooking the Books: Osborne, Mao, Same Struggle (2016)

The Cooking the Books Column from the January 2016 issue of the Socialist Standard

It was a good idea to twit George Osborne about his new-found love for the dictatorship in China to make the point that, when it comes to finding markets and investment outlets, ideology doesn’t matter. What does instead is the material, economic interest of the capitalist class, and that Osborne, as one of their governmental representatives, served this interest on his recent visit to China, despite it being a dictatorship and, to boot, one that (falsely) claims to be socialist.

But, in his response to Osborne’s 25 November Autumn Statement, Labour’s Shadow Chancellor, John McDonnell, fluffed it by choosing to quote from Chairman Mao’s Little Red Book and offering ‘Comrade Osborne’ a copy. What was he thinking of? He must have known that this would have been misinterpreted by a hostile media to paint him as a supporter of Mao, as one ‘Marxist’ quoting another. Of course neither Mao nor McDonnell are Marxists, and if anything McDonnell has been more of a fellow traveller of Trotskyism than Maoism.

The passage he quoted wasn’t very appropriate either. It was something Mao said in 1949, just after his party had won the civil war in China and assumed power there, about the need to learn how to run industries from those who had been running them under the previous regime (echoing what Lenin had said just after the Bolsheviks had seized power in Russia), ending with the trite punchline ‘we must not pretend to know what we do not know.’

Actually, the Little Red Book does contain some more appropriate sayings that could have been applied to the Tory government’s Five Year Austerity Plan. One section is headed ‘Building Our County Through Diligence and Frugality’.

In 1955 Mao said:

‘Diligence and frugality should be practiced in running factories and shops and all state-owned, co-operative and other enterprises. The principle of diligence and frugality should be observed in everything. This principle of economy is one of the basic principles of socialist economics. China is a big country, but she is still very poor. It will take several decades to make China prosperous. Even then we will still have to observe the principle of diligence and frugality. ‘

And again in 1957:

‘To make China rich and strong needs several decades of intense effort, which will include, among other things, the effort to practice strict economy and combat waste, i.e., the policy of building up our country through diligence and frugality.’

In those days there would have been billboards and compulsory workplace meetings shouting ‘Build Our Country Through Diligence and Frugality’, i.e. work hard and live on as little as possible. Maybe ‘frugality’ wasn’t the best translation of whatever the Chinese word was. A more appropriate one might have been …. ‘austerity’.

Hard work and austerity was what the workers and peasants of China got under Mao as their consumption was held down to build up state capitalist China’s industrial and military might. Since Mao’s death in 1976 China has evolved towards a more conventional kind of capitalism, with private capitalist firms, billionaires, a stock exchange and all the rest, but still under the dictatorship of the so-called ‘Communist’ Party. Not that that’s a problem for Osborne when it comes to doing trade and investment deals. Nor would it be for McDonnell if ever he became Chancellor of the Exchequer. Labour governments too have known all about how to look after the interests of British Capitalism plc.

Editorial: In the Recovery Position? (2014)

Editorial from the June 2014 issue of the Socialist Standard

The newspapers that have been full of talk about the economic crisis since 2008 have all of a sudden decided that an economic recovery is under way. Government statistics show that after falling sharply, GDP in the UK is just about back to where it was before the slump began. Average wage increases have now almost caught up with inflation, after lagging prices for years.  And on an almost daily basis newspapers like the Express and Mail trumpet the recent rises in house prices, rather like a child excitedly waving about a toy they’ve found in the lucky dip.

We’ve been here before of course. This is how all economic recoveries happen. The big fish that dominate things eat the little fish and get even bigger and stronger as a result. Their growing confidence is such they may even try to gobble up other big fish too – we can see this by the recent attempt from US pharmaceutical giant Pfizer to buy AstraZeneca. Both profits and wages start to rise again and so demand for goods and services starts to pick up. And the politicians that had been so obviously impotent to tackle all the pressing issues during the slump claim that it is their unique foresight and mastery of the economy that has brought about the feel-good factor.

In truth, it is very rare for slumps to be caused by politicians and even rarer for them to have any real, discernible impact on a recovery. Ever since its development in the eighteenth and nineteenth centuries the market economy has always suffered periodic crises and slumps, whether under Tory, Liberal, Labour or Coalition governments. Slumps are part of the market’s internal renewal and survival mechanism, right across the world. Far from governments running the market economy, it is – for all intents and purposes – the ups and downs of the economy that fundamentally influences what governments can really do.

George Osborne hasn’t yet been quite as foolish as Gordon Brown was when he claimed Labour had ‘abolished boom and bust’. But he is still foolish enough not to realise that the economic recovery – such as it currently is – will yet again lay the foundations for profit-hungry over-investment during boom times, and an over-expansion of key industries and services in relation to paying demand for them. And linked with this, of course, more unsustainable financial bubbles too as the ‘innovators’, ‘entrepreneurs’ and speculators move in. These classic market forces will all serve to trigger the next slump – and no doubt the rise of yet another gang of political tricksters claiming, against all the evidence of history, that they can fix it.

A Return to Full Employment? (2014)

From the May 2014 issue of the Socialist Standard

In a speech on 31 March George Osborne  pledged ‘today I'm making a new commitment – a commitment to fight for full employment in Britain’ (www.bbc.co.uk/news/uk-26814423). He was, however, careful not to define what he meant by ‘full employment’.

Beveridge, of the war-time Beveridge Report, argued that it was possible to achieve and maintain the unemployment rate at 3 percent of the active labour force. Keynes and the Keynesians taught that this could be achieved by appropriate ‘demand management’ by the government. And in fact, for most of the twenty years after the war the rate was around 2 percent. This is what most people will regard as full employment, taking into account workers temporarily unemployed as they move from one job to another or from a declining industry to an expanding one.

The Keynesians – and everybody was a Keynesian then, Tories as well as Labourites – claimed that this was a result of their policies. Others offered an explanation in terms of reconstruction and an expanding world market. That they were right was shown when the post-war boom came to an end in the mid-70s and Keynesian policies proved unable to do anything about it, except by adding inflation to the  stagnation and creating a new economic phenomenon dubbed ‘stagflation’.

Reserve army

Marx pointed out that the unemployed made up what he called ‘the reserve army of labour’, a pool from which employers could draw in periods of expansion. Without it, since of course it is workers who produce everything, the expansion would be compromised by a labour shortage. In a slump, on the other hand, members of the regular army of labour find themselves unemployed too. So, unemployment is high or low depending on which phase of its business cycle capitalism is in.

Full employment was achieved for most of  the period 1945 to 1965 because this was the time of the post-war boom, caused first by reconstruction and then by an expanding world market.  When this boom began to falter in the late 60s and burst in the mid-70s unemployment began to rise, fairly dramatically. The official rate rose from the 2 percent average in the mid-60s, passing the million mark (4.6 percent) in 1975 and reaching a peak of over 3 million (11.3 percent) in 1985. Since then it has never fallen below a million, the lowest being 1.4 million or 4.7 percent in 2005, i.e. its 1975 level. In the current slump that began in 2008 it reached a peak of 8.1 percent (2.6 million) in 2011. It is now about 7.2 percent. ‘Natural rate’

With Beveridge and Keynes discredited, economists looked for another explanation for this permanently higher level of unemployment and came up with the theory of ‘the natural rate of unemployment’. This was the rate below which there would be a rise in the general price level. Which is why they also called it in their academic works ‘the non-accelerating inflation rate of unemployment” (NAIRU). It has also been called ‘the full employment rate of unemployment’.

Although it is based on the mistaken assumption that higher wages lead to a rise in the general price level (whereas wages are a price which rises in line with all other prices), this is not entirely an irrational or ideological concept. In a boom falling unemployment puts workers in a stronger bargaining position allowing them to extract higher real wages, which employers can afford because they are making quicker and higher profits. In fact a boom is a period of rising prices as demand, and not just for labour, comes to exceed supply.

In this context the economists’ ’natural rate of unemployment’ is the rate which would exist when capitalism is neither in a boom nor a slump. They estimated that it would be between 5 and 6 percent, at least twice as much as during the post-war boom.

Empty promises

So, what rate of unemployment has Osborne promised to target? Is it the ‘natural rate’? Or is he promising to engineer a boom in which it will fall below this? Most probably the former, as in the same speech he showed that he had learned from the mistake made by his predecessors Nigel Lawson and Gordon Brown of promising a permanent boom, when he said:

‘You can’t abolish boom and bust. There are always going to be ups and downs to the economic cycle.’

The 5-6 percent rate of unemployment Osborne seems to be promising is not full employment. In which case he will be envisaging a permanent pool of over one million unemployed workers, which exposes the hypocrisy of the government’s claim to be forcing people off disability and incapacity benefit as a prelude to finding them a job. They know most of them never will. But unemployment ‘benefit’ is cheaper.

In any event, permanent full employment is not possible under capitalism because a permanent boom isn’t either.

Adam Buick

Cooking the Books: Down with welfare? (2014)

The Cooking the Books column from the April 2014 issue of the Socialist Standard

The Times (15 January) reported that George Osborne was to tell a conference organised by the think tank Open Europe that ‘Europe will face further economic woes if it fails to cut welfare spending’:

‘As Angela Merkel has pointed out, Europe accounts for just over 7 per cent of the world’s population, 25 per cent of its economy and 50 per cent of global social welfare spending. We can’t go on like this.’

He didn’t explain why not, but the implication must be that, to compete on world markets against the products made in countries which spend less on welfare, Europe has to reduce its welfare spending towards their levels. In other words, a race to the bottom.

One dictionary definition of ‘welfare’ is:

‘1. good health, happiness, and prosperity. 2. the maintenance of persons in such a condition; money given for this purpose.’ (OxfordReference Dictionary)

On this definition, Osborne was in effect saying that, due to competition on the world market, all countries are forced to reduce the ‘good health, happiness and prosperity’ of their population. What an indictment of capitalism! And what a confirmation of the futility of reformists’ attempts to make capitalism serve human welfare.

But is it true? One thing Osborne ignores is that ‘welfare spending’ is not motivated by a desire to improve human welfare but by a desire to improve the productivity of the workforce – a better educated, more healthy workforce feeling less insecure can produce more profits. This was in fact the capitalist rationale behind the introduction of the so-called Welfare State and why the drastic reduction of such spending to the levels in China or India which Osborne and Merkel seem to be proposing could prove to be counter-productive.

Osborne probably knows this and doesn’t regard such spending as an unnecessary burden that has to come out of taxes that ultimately fall on profits any more than he does military spending which also comes from this. For him, both will be part of the necessary costs of running capitalism. What he will be against is welfare for those who can’t or don’t work and so are useless from a profit-making point of view – the sick, the disabled, the mentally ill, the old, the unemployed and the unemployable. In short, the most vulnerable members of capitalist society.

The fact that welfare has become a dirty word for capitalism shows that it is not a system geared to improving human welfare. If it was, then as productivity increased (as it does slowly from year to year) more resources would be devoted to services and amenities that enhance the welfare of everyone. But this is not what happens. Far from it. The pressure is downwards not upwards.

The fact is that capitalism is a system geared to making profits and accumulating them as more and more profit-seeking capital. That’s the logic which is imposed on all countries through competition on the world market. In this sense Osborne and Merkel are right, but that’s a convincing reason to get rid of capitalism and to replace it with a system in which the welfare of all can and will be the priority. Which is only possible on the basis of the common ownership and democratic control of productive resources and the end of production for the market with a view to profit.

Cooking the Books: ‘I’m Not Going First’ (2014)

The Cooking The Books column from the January 2014 issue of the Socialist Standard

’I don’t want UK to be at the forefront of tacking climate change, says Osborne’, ran the headline in the Guardian (28 September) reporting on an interview George Osborne gave just because last year’s Tory conference. His exact words were:

‘I want to provide for the country the cheapest energy possible, consistent with having it reliable, in other words as a steady supply, and consistent with playing our part in an international effort to tackle climate change. But I don’t want to be the only people out there in front of the rest of the world. I certainly think we shouldn’t be further ahead of our partners in Europe.’

Given capitalism, and given his position as a member of the government of one of the many states into which the capitalist world is divided, his logic was impeccable. If Britain alone imposed stricter conditions than its rivals on releasing CO2 from burning fossil fuels into the atmosphere, this would increase the cost of energy to firms producing in Britain and undermine their competitiveness on world markets. The governments of other states follow the same logic. So nothing effective gets done to tackle climate change.

The main source of CO2 emissions is the burning of fossil fuels (coal, oil, natural gas) to power industry and transport and to provide heating and lighting. The trouble is that different states have access to fossil fuels more, or less, than others and each wants ‘the cheapest energy possible.’

So, any international scheme to reduce CO2 emissions that involved, for instance, cutting back on burning coal would disproportionally effect states for which this was the cheapest source of energy. It would increase the cost of production across their whole economy and make its products less competitive. The government of a state in this position will therefore oppose or seek to delay or water down any such scheme.

The same applies to oil. Of the fossil fuels burning gas emits the least CO2. So, a scheme to favour this at the expense of burning coal or oil would favour states with easy and cheap access to gas.

It is these conflicts of interest between capitalist states with different energy supply conditions that is preventing agreement on doing any effective to reduce even the rate of increase of CO2 emission let alone the absolute level.

It is also why no one state is going to unilateral measures to do this. Greens who campaign for their government to be ‘out there in front of the world’ on this are being naïve. Any government which did this would, by undermining the competitiveness of its industries, provoke an economic slowdown with increased unemployment and so likely be voted out of office.

Global warming is a world problem requiring a world solution. This is not going to happen under capitalism. Something may well be attempted, but it will be too little, too late. The only framework within which the problem can be solved is where the Earth’s resources have become the common heritage of all. Then there will be no capitalist vested interests standing in the way nor any market forces working against a solution.

Editorial: How to lose friends and alienate people (2008)

Editorial from the December 2008 issue of the Socialist Standard

It would be hard to devise a scenario more likely to set the UK media drooling than the storyline that developed during late October. A couple of indiscreet politicians and an aristocrat enjoying the hospitality of a Russian oligarch's superyacht moored off Corfu is not newsworthy in itself of course.

What really attracted the attention of the media was the Tory shadow chancellor (George Osborne) and his indiscreet breach of the code of honour of his old upper-class binge-drinking club, and particularly his friend Nathaniel Rothschild, - who's guest he was - and who is also apparently worth a bob or two.

Osborne made the mistake of gossiping about a conversation he had on board with Peter Mandelson. At the time he was messing around in boats this summer he was an EU Commissioner for Trade but has since returned as a peer to Labour (previously known as New Labour), after various spells as the “architect” of New Labour (previously known as Labour).

If you're feeling confused, don't worry - what is of interest to socialists is how the whole episode has lifted a grubby stone to uncover many examples of the shenanigans of our ruling class. For example, one person in the vicinity was Rupert Murdoch's daughter Elizabeth who had her own boat nearby and was spending a week in the Mediterranean just to plan her 40th birthday celebrations. ( If that’s how long the planning takes, what were the actual celebrations like?).

Anyway, upset that his mates were bitching about each other only a few weeks after the yacht-party, Rothschild dropped Osborne right in it by accusing him of soliciting funds for the Tories, from the yacht owner. His name is Oleg Deripaska and he actually comes over better than most in this episode, despite being alleged to be a thug who has effectively extorted billions of roubles out of the state-owned industry through close involvement with the Russian mafia. This is of course outrageous, but if we are being consistent, it is pretty much how most of today’s capitalist class got their wealth, whether a few centuries or a few generations earlier.

This story of thieves falling out in the playgrounds of the rich sheds a little light on how our increasingly inter-connected economic and political upper-class spend their money and time (what Peter Mandelson might term “serious relaxing”). But all parties to this grubby exchange – the economic sugar-daddies and their political lapdogs – appear to have now conveniently agreed to call a truce rather than risk damaging their collective reputation.

Discretion in their discussions with each other obviously counts for more than transparency and accountability to the rest of us who actually create the wealth they go to such lengths to consume. Entering a period of rising unemployment and re-possessions is probably not the best time for the “have-yachts” to rub our noses in the details of the marvellous parties they always seem to be throwing for each other.

Any workers who share our anger with, and analysis of the problems of, capitalism are encouraged to apply to join via the address below on this page. Needless to say, this address can be used also for any billionaires wishing to make a donation.