Cooking the Books: Budgets for Business as usual (2023)

The Cooking The Books column from the April 2023 issue of the Socialist Standard

This year 15 March was budget day, the day the government announces its money-raising and spending plans for the financial year that begins in April. Jeremy Hunt went on about ‘growth’; the Labour Shadow Chancellor sounded like she was Liz Truss, accusing Hunt of not being ambitious enough (in effect of not making wilder promises). But no government has the power to bring about growth.

‘Growth’ is an increase in the amount of marketable wealth produced in one year compared with the previous year. The only people who can organise this are those in charge of the profit-seeking businesses that produce such wealth.

But even they don’t have a free hand; they have to take account of market conditions, which are outside of their control, and only increase production if they judge these offer a prospect of making a profit. It is this business investment for profit that drives the economy. The most any government can do is to try to ensure conditions that allow and encourage this. In fact, if they don’t they will provoke an economic downturn.

Capitalist firms and their owners accept that there must be a government, if only to protect private property rights, keep law and order, and maintain armed forces, though these days governments do much more for them than this; they pay, for instance, for the workers’ education and health to create a more productive workforce for business. All this costs money and has to be paid for.

The main direct tax on businesses is corporation tax, a tax on their profits (the main indirect tax is income tax on wages). Rishi Sunak, when Chancellor, announced in the 2021 budget that this would go up from 19 percent to 23 percent from 1 April 2023. Hunt confirmed that this was to go ahead. However, there are generous exemptions. For the next three years businesses will not have to pay corporation tax on any profits that are invested in the full cost of new machinery, plant or IT systems. In other words, not on profits that are directly re-invested in accumulating capital; which in fact is the main aim of capitalist production.

The government’s aim is to encourage business investment, the driver of growth. Whether it will work remains to be seen. Businesses won’t invest just to avoid taxes but only if the investment will be profitable.

At the moment, Britain has a ‘labour supply problem’. Another way of putting this is that there is a shortage of wealth producers since there is no other way that wealth can be produced other than by the application of human labour to materials that originally came from nature. Which is what workers do. No workers, no wealth and no capitalist share of wealth as profits.

This shortage is partly the result of previous government policy, albeit one endorsed by a referendum, to withdraw from the EU and stop the free movement of workers from the rest of Europe. To deal with the shortage, Hunt announced three measures. The first was to allow those with a pension pot of £1 million — not your ordinary worker, then, but someone on the way to becoming a capitalist — to accumulate more without having to pay tax on it. The second was to improve nursery facilities for families with both parents working. The third was to cut the payments to the unemployed, to in effect starve them back to work. The hope is that this will encourage more, especially mothers, to join the wealth (and profit) producing force. Again, a measure aimed at helping profit-seeking business make more profits. But there is no guarantee that it will work either.

Shock, horror, Chancellor tells it like it is! (2022)

From the November 2022 issue of the Socialist Standard 

On Monday 17 October Jeremy Hunt faced the truth and declared that 'No government can control markets' (bbc.in/3yMdtml).

We could quibble with the accuracy of what he went on to say ‘but every government can give certainty about the sustainability of public finances’ (think pandemics /‘surprise’ wars, etc.) but it’s not our job to argue about the way the capitalist class funds state functions.

The fact is that markets eventually control any government elected to administer these functions. Those markets in turn are governed by the capitalists’ drive for profit, and when Hunt talked about maintaining or restoring confidence, he meant that the capitalists need reassurance that states won’t hinder that drive. Building ‘confidence for investors’ is part of Starmer’s ‘mission for economic growth’ too (Link).

Workers should remember this when reformist parties (right or left) promise to introduce order to the system. They won’t. They’re liars or they're deluded.

Editorial: That’s not all, folks! (2022)

Editorial from the November 2022 issue of the Socialist Standard

Last month the world looked on with bemused fascination as the UK Tory leadership attempted to handle the economy the same way the iceberg handled the Titanic, reminding everybody once again, as if Trump and Bojo were not lesson enough, that it’s possible for people to get into positions of power who really have no idea what they’re doing.

The markets dived, pundits gaped and soberer heads than Liz Truss, like Putin, Xi Jinping and Kim Jong-un, scratched their heads and wondered if the British state had been taken over by Warner cartoon characters. An anvil dropped on the old Chancellor after he pulled the trigger on his Trust the Market bazooka, Keir Starmer rocketed like Wile E. Coyote into the stratosphere and the Tory PM ran out of road and fell off a cliff. The new Chancellor, who had been hastily whistled up to deploy an Acme Damage Limitation gizmo, started unpromisingly by conceding in his first speech that ‘governments do not control markets’.

We’ve been saying all along that governments can’t do this, although never underestimate their ability to make things worse (see Cooking the Books, this issue). Markets don’t deliver public benefit, they deliver profit for a few and cause misery for many and destruction for the planet. And if they deliver an earthquake, governments normally prefer to blame the opposition, or the unions, or latterly Putin, or their own staff. You can hardly blame the system one minute, and then ask people to vote you into office to control the system the next. The fact that Jeremy Hunt has admitted this shows you what a desperate hole they were in. The only thing they can hope for come next election is a large dose of public amnesia.

Most people will simply shrug and say, that’s what happens when you put criminals or idiots in charge. The next lot will be better, they say, because they couldn’t be any worse. Experience suggests otherwise. Whole government institutions, not just leaders, can display surprising levels of incompetence, as we discover with the British intelligence services (see Spycatchers, this issue). And why follow leaders anyway? Much better not to put anyone in charge, but instead take collective charge ourselves (see Pathfinders, this issue).

The alternative left-wing media outlet Double Down News provided some fun in the form of an exquisitely venomous take-down of Truss and Kwarteng by former Daily Telegraph journalist Peter Oborne, in which he argued that the vainglorious duo had sold out common sense and political reality in order to promote the interests of their favourite hedge fund managers and super-rich oligarchs. But one wonders what he thinks political leaders do the rest of the time. Serving the interests of the rich and powerful is what all governments do, no matter how progressive and reformist their speeches might look, because once they’re in power they have to run capitalism and that means doing what the rich want them to. And that’s not all, folks. Until we get rid of this system, the capitalist cartoon disasters will run and run.

Editorial: Chairing UK plc (2019)

Editorial from the July 2019 issue of the Socialist Standard

By the end of this month Britain will have a new Prime Minister – either Boris Johnson or Jeremy Hunt – but does it matter?

In Britain the Prime Minister is the head of the government, the executive arm of the state. The state, we are told, represents the people. In reality, however, as Marx and Engels identified, ‘the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie’. In other words, the state and its executive, the government, do not represent the interest of everyone but only of the few who own and control the means of production. The Prime Minister is the chair of the executive committee charged with this.

The person who fills this role does not have to be a capitalist. In fact this has rarely been the case. In the nineteenth century the capitalists were content to let aristocrats fill this and the other posts on their executive committee. Nowadays, both the chair and the other members are filled by people, many from the working class, who have chosen to make a career out of being a politician.

In the end it doesn’t matter who the members of the ‘committee for managing the common affairs of the whole bourgeoisie’ are. What matters is that they have to manage these common affairs and that this involves, besides arbitrating between sectional interests, putting conditions for profit-making before everything else.

There is a political constraint too. In Britain the government has to command a majority in the House of Commons for its policy. Where this is not the case, as now over UK plc’s membership of the EU, there is a problem.

Until the introduction of the 2011 Fixed Term Parliament Act, the Prime Minister was able to call a general election. Now this rests in the hands of MPs and, at the moment, there are not many Tory MPs who want one for fear of being tossed off the greasy pole. They are disguising this as a fear that an election today could result in a ‘Marxist’ becoming Prime Minister.

The depiction of Corbyn as a Marxist is absurd – he’s mainly just an old-fashioned Labour reformist – but, even if he were one, this would make no difference. As chair of a committee charged with managing the common affairs of the capitalist class, he would be constrained by economic circumstances to give priority to profit-making, despite this not being his intention. But he would at least have a better understanding of his predicament: elected on a promise to improve things for the many he would eventually have to put the profits of the few first.

So, no, it does not matter who is the Prime Minister as it is not governments who control how capitalism operates but the operation of the capitalist economy which limits what governments can do, obliging them to put profits first. Whoever chairs the committee managing the common affairs of the capitalist class merely presides over the meetings at which the formal decisions to do this are taken. Why should we get worked up over who it is?

Action Replay: Horse Voices (2011)

Insert picture of horse here.

The Action Replay column from the January 2011 issue of the Socialist Standard

All is not well in the Sport of Kings. The owners and trainers want more money for 2011–12 from the bookmakers, via the levy or tax on their profits, but the bookies are unwilling to pay up. Consequently the government will have to make a decision, in the person of Jeremy Hunt, the Secretary of State for Culture, Olympics, Media and Sport.

Of course there is a lot more to this than just a squabble about how much is paid over. Attendance at race meetings is more or less holding up, but otherwise racing is feeling the force of the recession. Trainers are going out of business regularly, and one prediction is that barely a quarter of the 85 who currently train at Newmarket will survive. The owners are in most cases wealthy individuals who see racing as a hobby that can sometimes make money but is mainly indulged in for fun. This hasn’t stopped them threatening to strike in order to get their way in this squabble, though. 

Then there are the bookies, who maintain that horse racing is becoming less and less important as a source of income for them, with it now contributing less than one quarter of the money they get from punters. Moreover, racing paraphernalia take up a lot of space in betting shops, and TV coverage has increased in price. But in particular it’s on-line betting that has caused the problems. If people can bet on roulette, bingo and football over the Internet (including while a football match is being played), there is less left over for the gee-gees. The traditional bookmakers have in some cases moved their operations offshore to avoid paying the levy.

One bookie said, in a nice phrase, that the top owners and trainers, were ‘shooting themselves in both fetlocks’. But really it’s a typical row between groups of rich individuals that will see many workers in the racing industry suffer as the powers-that-be argue among themselves and the whole industry struggles to cope with economic and technological changes.

Paul Bennett