Another New Year party (2026)

From the January 2026 issue of the Socialist Standard

Following the turn of the year I am pleased to announce the emergence of a new political force, Barnsley Social Action. As I was an enthusiastic biker back in the ‘60s BSA seems appropriate. The focus for this exciting political initiative will be to fight for Barnsley’s independence from the overpowering political behemoth that is Westminster and the regional dominance of Yorkshire. ‘Let the Tykes Take Power!’

I am, of course, appreciative of the Socialist Standard for so willingly providing an initial platform for this, my ambitious project. The first task will be to ensure that no small boats will be redirected from the south coast to sail up the Dearne.

At this point I consider it most important to state without equivocation that all of the above is utter nonsense. Actually such a statement surely can’t have been necessary. Who would set up a political party on such a narrow (minded) basis?

Ex-Reform UK MP Rupert Lowe, now sitting as an independent, has – at time of writing – launched Great Yarmouth First (GYF) with the stated aim of promoting the specific interests of his constituency. This is surely a basic requirement of any MP, whatever the party affiliation, within the considerable limitations imposed by the requirements of capitalism.

Lowe claims 500 residents have already signed up and he has personally funded the fees for all these new members for a year. Quite how committed this cohort of supporters are may well become apparent in twelve months when renewal time comes around.

The specific political purpose of GYF is according to Lowe, ‘completely focused on doing what is right for Great Yarmouth, not what is right for Norwich or London’. This new party is needed because not only have national governments let people down, ‘the rot extends to local government as well’.

How fortunate for the citizens of Great Yarmouth such an immaculate political messiah was chosen by the electorate at the last election. However, his vision does extend beyond the locally myopic to the rest of the country. Not only does he head GYF, Lowe also leads Restore Britain. The headline aims of this organisation are low taxes, small state, slash immigration, restore Christian principles, fight wokery and so it goes on…and on.

The multi-millionaire Lowe is quoted in the Great Yarmouth Mercury saying ‘We are building a powerful local movement that will fight for local priorities. No petty national politics, just local politics for local people’. This statement seems to stand in contradiction to the obviously national and nationalist Restore Britain. The basic premise of both of Lowe’s groups is to play up, and on, prejudices unfortunately held by too many people looking for simple solutions to their many political, economic and social problems.

While it might seem an organisation such as Great Yarmouth First must be of limited political significance, it does reflect an underlying feature of more widespread popular discourse. A competitor for Barnsley Social Action would be The Yorkshire Party. The website of the would-be governors of Britain’s largest county refers to things socialists recognise, such as: ‘This isn’t about left or right’, ‘Our rivers shouldn’t be profit streams for offshore companies’, ‘Subsidiarity – decisions made as close to the people as possible’, ‘Dignity – respect for every person and community’, ‘Community – working together’, ‘Cooperation – shared goals…’

There is also mention of values such as fairer, stronger and more democratic, though specifically in Yorkshire. Most of what is offered is fairly standard social democratic fare that Labour, Liberal Democrat and even reasonable Conservative (if that’s not too much of an oxymoron) supporters could subscribe to.

It certainly doesn’t read as being rabidly explicitly nationalistic, except, of course, its focus is narrowly on Yorkshire. As often with local political groupings The Yorkshire Party seems fuelled by resentment of a perceived national, for which read Westminster, bias against the county, especially in economic terms.

There is certainly good reason for people to feel economically aggrieved, to rail against the failings of the NHS, to be very much aware of the democratic deficit whereby voting, locally and nationally, changes very little for the better. However justified these feelings, however worthy the aspirations, none of this applies specifically to Yorkshire alone. The social democratic style solutions, along with a Yorkshire parliament to enact them, are aspirations that can never be realised even if the entire White Rose vote went to this party.

The fundamental problem that every party, local, regional or national, cannot overcome is capitalism. No matter how sincere or well intentioned, the scope for positive political action is severely curtailed by market economics, the undeniable drive to realise profits. Even such an explicit adherent to capitalism as former Prime Minister Liz Truss could be evicted from Number 10 Downing Street within about a month and a half of taking up residence. She wasn’t even proposing some wildly radical social reforms. Just showing her Conservative intentions as ill thought-out and economically inimical to market interests was enough.

A perfect example of the democratic deficit in that Truss was toppled from power not by the ballot box, but, in effect, the workings of the market. She wasn’t even in power long enough for a conspiracy to be formulated against her. Capitalism doesn’t really need conspiracies or coups d’état. If bond prices fall or share prices tumble so do the politicians or policies that are perceived as being the cause. Certainly no requirement for an election.

So for Great Yarmouth First, The Yorkshire Party – you can also read the Scottish National Party, Plaid Cymru or similar, Reform UK, the seemingly shambolic Your Party, The Green Party or the three main Westminster parties. Because whatever their political differences they are all the same in one essential feature. They can only act as far as capitalism and its imperatives allow.

The achievement of real change would mean an economic arrangement in which the means of production are held in common so ensure people’s needs are met uninhibited by the profit motive, in a truly democratic society in which people freely contribute without any requirement for money. In a word, socialism. Such is only achievable on a worldwide basis. Of course, people will always relate to their localities, but they have no need of being located within national boundaries. A time when communities were fairly static are long passed.

There is a deal of archaeological evidence showing that even in prehistory Neolithic trading links between widely separated communities existed, when the concept of national boundaries didn’t exist and wouldn’t for thousands of years. Indeed, from the earliest days of the emergence of humankind migration has been a feature. The idea of being defined by location in nation states is but a brief moment in our collective history. So the prospect of a worldwide cooperative community cannot be dismissed as fanciful or a contradiction of human nature.

But people have to want this, have to be actively involved in working through the details, accepting there can be no leader or party that can do it for them.

Until then there is always Barnsley Social Action – no one from Doncaster need apply.

Dave Alton

Cooking the Books: More pro-business than thou (2024)

The Cooking the Books column from the June 2024 issue of the Socialist Standard

Chancellor-in-waiting Rachel Reeves’s commitment to private capitalist business knows no bounds. ‘We will be the most pro-business government ever, vows Reeves’ was the headline of an interview with her in the Times (25 April). For the record — to remember when someone asks you to vote Labour in the coming general election — her exact words were:

‘If I become chancellor, the next Labour government is going to be most pro-business the country has ever seen’.

That’s quite an ambition. To be more pro-capitalist than Gladstone’s Liberals in the 19th century, the Tory governments of the 1920s, and the Thatcher government of the 1980s!

But why is she saying this? It can’t be to catch votes since big business hasn’t a particularly good reputation amongst the general public. It can’t really be, either, to convince business that Labour is fit to govern in their interest as business has been convinced of that since the first Labour government a hundred year ago. It is more likely to assure ‘the markets’ so they don’t do to her what they did to Truss.

After all, like Truss, she has a plan to try to artificially stimulate ‘growth’. She put it this way:

‘I genuinely believe the way to improve living standards and to achieve our potential is by unlocking private business investment’.

Truss wouldn’t disagree. The difference is that Truss planned to do this by reducing direct taxes on profits while Reeves plans to do so by bribing capitalist firms with contracts and subsidies. Both hoping that the resulting growth would avoid the government having to cut spending (too much).

Reeves explained that under her plan:

‘the government would provide state support to give business the confidence to invest in expensive and risky technologies … To get people to invest to produce green hydrogen they need to know that at the end they can sell it … So the role of government in the sector might be to say, “You produce it and we will guarantee that it is purchased. We will be the backstop to that”’.

The government is going to do this by offering to put up a quarter of the cost (of in this case providing places where motor vehicles can fill up with hydrogen), by borrowing it from ‘the markets’, as long as private capitalist business invests the remaining three-quarters. There are two uncertainties here. First, private capitalist business won’t put up the money unless they expect to get the going ‘rate of return’ on their investment and, second, will the rate of interest that the speculators who lend the government money charge for their loan be less than the rate of return the government expects to get from investing in the project?

Neither is guaranteed. Nor can be. In other words, whether or not Reeves’s plan works depends entirely on decisions taken by profit-seeking private enterprises and international speculators. No wonder she is insisting the next Labour government will be so pro-business. Mind you, there is a certain perverse logic to her position. If you accept capitalism more or less as it is (as she and Labour do) you accept that the economy is driven by business investment for profit, therefore you must encourage this and kowtow to business. But she doesn’t need to be quite so obsequious.

Vague and Vacuous (2024)

Book Review from the February 2024 issue of the Socialist Standard

Values, Voice and Virtue: the New British Politics. By Matthew Goodwin. Penguin £10.99.

Goodwin was co-author of National Populism, reviewed in the March 2019 Socialist Standard, which was largely an unconvincing and unpleasant defence of a xenophobic form of nationalism. His latest book is no better.

The basic argument is that, since the 1970s, there has been a revolution or re-alignment in British society and politics. Thatcher supposedly emphasised family values and individual responsibility, but also ‘ushered in the new era of hyper-globalization’, as if this was government policy rather than part of the way that capitalism works; this involved, for instance, selling off ‘many of Britain’s assets’. The former ruling class of industrialists and landowners was replaced by ‘a new middle-class graduate elite’. The latter attended top universities, and were not just journalists, politicians and broadcasters, but also academics, doctors and architects. They have allegedly made it much harder for white boys from a manual working-class background to get into university. They control Britain’s main institutions, and a third of MPs have postgraduate degrees. Many of the elite are radical ‘woke’ progressives, a group that apparently constitutes about one in six of the population.

It is noted that Britain has become more unequal, and there are some passing references to very wealthy people, such as the ‘international jet-setting elites’ who have homes in London but also in New York and so on. Yet overall the author has not the slightest idea of how capitalism operates, of the division between a tiny minority who own and control the planet’s resources, and the rest, who have to work for them. The decline in manual jobs is noted, and much is made of the geographical divide between London and the rest of the country. But in London a quarter of the population live in poverty and one in fifty are homeless, though the reader would not gather this from Goodwin’s treatment.

It is correct to say that choice was reduced in politics as Tories and Labour grew closer together. However, the book’s focus is very much on England, with no discussion of parties such as Plaid Cymru or the SNP. The claimed counter-revolution against the new rulers involved three revolts: populism, Brexit and Boris Johnson. Brexit, we are told, was intended to reduce immigration and ‘restore Britain’s national sovereignty’ (whatever that is). Despite his privileged background, Johnson was ‘a renegade member of the elite’ and became leader of the non-graduate majority who supported the counter-revolution. But Partygate derailed this, and Truss’s ‘small-state, low-tax’ vision of Brexit failed as it had little popular support (nothing to do with market reactions, then).

The whole book is a fantasy, with no arguments to show how the supposed former ruling class have been replaced by the graduate elite, and no understanding of how politics under capitalism is driven by economic interests and the need for profit.

Paul Bennett

Cooking the Books: Who creates wealth? (2022)

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

‘Miners put faith in filters to prevent further dam disasters’ read a headline in the business section of the Times (1 November). You might think that this was an article about mineworkers being reassured that measures were in place to lessen the risk of them being drowned in some mining disaster. But you would be wrong. If you read on, it’s about measures being taken by ‘two of the world’s biggest mining groups’, BHP and Rio Tinto.

This distortion of the word ‘miner’ to mean mining companies and even the tycoons, oligarchs and other multi-billionaires who own them (see ‘world’s richest miners') is standard practice on business pages. Similarly engineering companies are referred to as ‘metal bashers’. But the owners of these companies don’t work in a copper mine and don’t operate a machine-tool. They exploit those who do, by turning into profits what their employees produce over and above the value of their wages.

Such misuse of language is not confined to the business pages. It is also common amongst defenders of capitalism. The short-lived prime minister, Truss, declaimed to the Tory conference:

‘We believe in making it easier for our wealth creators, doers and makers to get things done’ (Daily Mirror, 1 October).

She was justifying the abolition of the highest rate of income tax and the lifting of the cap on bankers’ bonuses. Apparently, bankers and other rich people ‘create wealth’. They are certainly, in some cases, ‘doers’ (though not of anything useful from the point of view of human survival) but they are not ‘makers’ of anything and they don’t create any wealth.

So, let’s go back to basics. What is wealth and how is it created? Wealth is anything that is useful to humans. Some wealth such as the light and warmth from the Sun is a free ‘gift of Nature’ but most wealth has to be produced by human activity, by humans exercising their mental and physical energy. The materials on which humans work are, like the Sun’s rays, provided by nature. New wealth is ‘created’ when humans work to fashion or refashion materials that originally came from nature into something useful to them. Doing this is ‘production’.

Some of the materials humans work on are extracted directly from nature, as by copper or zinc miners; other materials worked on have already been transformed into wealth, as the pieces of metal that engineering workers alter or assemble.

The work of creating new wealth is not just physical. Mining is not only the work of physically extracting materials from the ground; engineering is not only changing pieces of metal into something else. Like all work, these also involve planning and designing the best way to do the physical work. All work involves both physical and mental activity, at both the production unit and the individual level. There is no way that wealth can be created other than by humans working on materials that originally came from nature.

Defenders of capitalism confuse wealth with the monetary value that wealth assumes under capitalism and so assume that anybody who makes a profit is ‘creating wealth’. This has a certain perverse logic from their point of view since capitalism is not a rational system geared to creating wealth to satisfy people’s needs. Its aim is to create monetary profits.

So, let’s rephrase the ephemeral Truss’s words: ‘We believe in making it easier for our profit-seekers to make profits’. Socialists, on the other hand, believe in making it possible for the wealth creators to make useful things to directly satisfy people’s needs. This is possible only on the basis of the common ownership and democratic control by society of the materials, natural and industrial, for creating wealth.

Editorial: All fiscal conservatives now (2023)

Editorial from the August 2023 issue of the Socialist Standard

So Starmer says he doesn’t object to being called a ‘fiscal conservative’ (BBC interview, 16 July).

The Labour Party used to seek support on the basis of providing social reforms that would benefit workers. That in fact was said to be their reason for existence and why trade unions supported them. Not any more. Starmer could not have been more specific when two days later he declared that ‘it was “a big mistake” for the left to equate spending money with radicalism’ (Times, 19 July).

Quite apart from the fact that this is a betrayal of the views he feigned to hold when seeking election as Corbyn’s successor, the economic policy he now espouses is basically the same as Truss’s — which both described in the same terms as ‘Growth, Growth, Growth’. In other words, to try to force the capitalist economy to expand more. Since governments produce no wealth of their own, the only ways they can get money to fund their activities are taxes or borrowing.

The Truss government tried to encourage growth by cutting taxation on capitalist enterprises while leaving government spending more or less unchanged; which meant the shortfall would have to be paid for by increased borrowing. The international speculators who lend money to governments were not prepared to play ball and a financial crisis ensued which led to the fall of the government.

Starmer and the Labour leadership realise they have to avoid this. As Yvette Cooper, the shadow Home Secretary, put it:

‘We saw what happened with Liz Truss and Kwasi Kwarteng’s mini-budget. They ended up promising huge tax cuts for the rich. None of it was funded and they ended up crashing the economy’ (Times, 18 July).

So as not to spook the international speculators they are not even prepared to offer minor reforms for the workers such as lifting the ban on parents on Universal Credit claiming benefits for more than two children. No, they are assuring the markets that they will be ‘fiscally conservative’.

Labour’s promise to make capitalism grow is a gamble as experience has shown that governments cannot do this. The most they can do is sustain conditions that might encourage profit-making but the final decision as to whether or not to expand production — to grow — rests with individual capitalist enterprises and their estimation of whether or not doing so would be profitable. Sometimes it will be; sometimes it won’t, but no period of growth is ever permanent.

Unless it is very lucky in that world market conditions bring it about, a Labour government will not see capitalism grow as much as they are promising. When growth stalls they will have to continue to be ‘fiscal conservatives’ and cut payments to workers, including the poorest, just as all previous governments, Labour as well as Conservative, have done.

Starmer is in effect admitting that reformism has failed (as we always said it would). His conclusion is to abandon reformism and embrace capitalism and its logic. Ours is to go for socialism, the common instead of class ownership of resources and production directly to satisfy people’s needs not for profit. The choice is what it always was — capitalism or socialism?

How political power works: what we can learn from the fall of Truss (2023)

From the January 2023 issue of the Socialist Standard

The short-lived tenure of Prime Minister Liz Truss is a case study of how political power works in the United Kingdom. By any institutional measure, Truss was in a strong position: her party had an unassailable majority in the House of Commons, she could wield the power of the Prime Minister over the civil service and the power of considerable patronage was hers. She also had the option of the Prime Ministerial megaphone: everything she could have said would be newsworthy and reach every home in the country. All she had to do was play the cards she had been dealt tolerably well and she would have been set for a minimum of three years in office.

As she misplayed that hand, though, it became clear how the might of political office is constrained by a series of golden chains, each interlocking and pulling together to ensure that political power (backed, ultimately, by the military force of the state) does not threaten the dominance of the section of society that owns its productive wealth. These same chains ensure that no one individual or faction gets to turn the state into its private property.

The Establishment

To be clear: there is no secret cabal of capitalists directing the state – different groups and factions of wealthy individuals and institutions compete to try and bend political power to serve their interest. Which means, incidentally, that the space is open for the working class, organised consciously and politically, to wrest control of that same machinery and convert it to our own ends.

Truss came to power after an election among Conservative Party members. Thousands of ideologically motivated people joined the political party to advance the cause they believe in. She won because she promised them the policies they wanted – most importantly, lower taxes. In this case, the wishes of the lay membership did matter, and their expressed preference was conveyed by Truss into government policy. She could, indeed, have reneged on that promise, but activists matter because they operate the machinery of competing for elections on the ground: they can only be disregarded so far before it starts to have an effect on the electoral chances of a party.

Truss was, herself, a relative outsider within the networks of UK power. She was a former Liberal Democrat activist, who went to a Leeds comprehensive school. She did, however, go to Oxford, and gained the advantage of the network building opportunities there. By contrast, her Chancellor, Kwasi Kwarteng, was educated at Eton, just like two of the last three Prime Ministers before Truss. The small number of elite schools providing for the upper class in the UK helps build the personal and social bonds and networks that lead to common understanding and a form of trust between them. Truss herself supplemented these general networks by specific links to the Tufton Street set of libertarian lobby groups whose ideas she put into place.

The wider electorate

Politicians, however, also need the votes of the wider electorate: and so, rather than cut government spending to allow tax cuts, with all the economic and social pain that entails, Truss and her Chancellor Kwasi Kwarteng chose to cut taxes and borrow to maintain government spending. They argued the tax cuts would incentivise economic growth (and thus allow the spending levels to be maintained medium term, even as the tax take falls as a share of the national effort). This argument wasn’t entirely without merit, and could, in theory, pay off.

Cutting taxes would raise savings and mean there would be more money in the system available to invest in growth. Likewise, cutting taxes might make what had previously been unprofitable business models work (for their owners, at least), and so spur economic activity. The downside is that by borrowing, the government would still be soaking up a lot of the investable wealth (probably pushing up interest rates across the board), and the rate of profit for businesses might remain so low as to continue deterring growth and investment. Truss and Kwarteng might have been able to sell such a plan, given time, but their proposals were put forward as a response to a weak position in UK government finances, and so it looked more like a panic response, rather than a considered and carefully prepared plan.

Market forces

This in turn brought the great machine of class rule into play: market forces. Investors and speculators responded by moving their money away from the UK: fewer people wanted to do business or hold assets denominated in pounds, and so Sterling fell against the Dollar. This, in turn, led to the Bank of England putting up its interest rates to try and attract them back, and to restore (or at least defend) the value of the pound. Had the Bank failed to act, it would have meant significant increases in the cost of imported goods (and the UK economy depends on imports very much). Although UK exports would have become more competitive, that would not necessarily happen fast enough to offset the immediate pain and cost of living changes people would have experienced.

Again, there was no meeting of capitalists to decide this although undoubtedly, the common ideology, background and prejudices of fund managers may have played a part. They would have met and discussed this in the course of their daily activity; but, fundamentally, they would be acting in the interests of themselves, their funds and their clients by responding to the British government’s policy in this way. By forcing up interest rates, with the government planning to borrow more, this was a devastating blow. The national debt, and the requirement for governments to behave in a manner which will satisfy lenders, is a key means of ensuring the general financial probity of the state.

Another related – and nearly disastrous – consequence of this was that the Bank of England was also forced to intervene to protect the UK pension fund markets. Pension funds have to hedge against a potential fall in their incomes, since they must guarantee pensions to their beneficiaries. The rapid rise in interest rates led to a nominal fall in the value of the bonds they were holding as security (so called Liability Driven Investments, LDIs). So they had to start selling off assets in order to pay the collateral on their hedges, since there was immediate demand for funds. As this happened to many valuable funds at once, this led to systemic risk to the whole pension industry: in turn, the Bank of England had to spend £65 billion in order to shore up the system and prevent collapse.

This was a devastating reputational blow to Britain’s financial system, and also to the Prime Minister, since her policy had endangered the pension provision of much of her core electorate.

The Members of Parliament

This brought into play Conservative MPs. Prime Ministers, although nominally appointed by the monarch, in reality serve at the confidence of their party in the House of Commons. Truss did not have the support of the majority of Tory MPs in the first place, leading some liberal commentators to opine that allowing party members to elect the Prime Minister is an affront to democracy and the Tories should go back to a leader simply ‘emerging’ from within their ranks, or having MPs only voting in a ballot. Keeping the pool of electors small promotes stability and predictability, and benefits the ruling class, but the demand for party members to be involved has drawn that power away, and it looks unlikely that it will be done away with completely – if and when possible, instead we’ll probably get ‘managed’ coronations, like that of Sunak or Brown before him.

Added to this weakness, in Truss’s case, was that the Tory MPs feared that their seats were now at risk en masse, and that Truss was a threat rather than an asset to their political careers. This is a feeling that would have been reinforced financially as various Tory donors made their displeasure felt. In the UK, the party that wins elections is usually the party that spends the most money. This isn’t necessarily a direct result of spending, because the party that looks like winning attracts the most donors and so has more money to spend in any case, but it is clear that funding of political parties is another means by which the wealthy section of society can exert influence over the political direction of the government.

In this case, they were helped by changes in the positions of the opposition party – the fact that Labour was now, again, a safe party for business people to invest in, means it could be used as a threat to the careers and aspirations of Conservative politicians. After all, it doesn’t matter what party is in power, for the truly wealthy, as long as their policies are at least congenial. During the Corbyn years, they could not be sure of the Labour Party, and this helped solidify elite support for the Tories, whatever their other misgivings about them. Now Starmer is in place, and Labour is ‘Pro-worker, pro-business’, they can be used to discipline the Tories. Some large Tory donors even came out of the woodwork to support higher taxes, as necessary to stabilise the economy, ie looking at their long-term interest, rather than the short-term rewards of tax cuts.

The mass media

Finally, the mass media, particularly the newspapers, played a big role, both before and after the rise and fall of Truss. The Daily Mail played a significant part in getting her elected in the first place, emphasising that she was the front runner (and exaggerating her support in the wider party, compared to the actual rather close race between her and Sunak). The Times and The Sun, the Murdoch papers, were typically more sceptical, and intensified their periodic attacks when she was elected. The focus of the press on the failure of her budget exacerbated the crisis, and clearly indicated that they would turn their considerable fire power against the Tories at any coming election while Truss was in charge.

Most people rely on the mass media for their information on how to place their votes. It is indicative that Boris Johnson, who just one year ago seemed utterly invincible, vanished in a puff of smoke the second the press began to focus like a laser on his behaviours. The press is certainly not all powerful, but it typically generates the headwinds which can push up and pull down political careers.

Elections and voting are thus, contrary to the anarchist saying that ‘if voting changed anything, they’d get rid of it’, key to political success or failure, and they involve considerable management to win the ongoing support of the majority of the public for government policies.

To take a counter-factual: if Truss had just won an election, her MPs would probably have stood by her longer. If she had a more connected background, she might have been able to ask informal favours of people in other institutions, or had more trust from important market agents. She would have been able to face down the press more convincingly and might even have been able to stand up to the market pressure (blaming spivs and speculators for the short-term harm) and stabilise the situation. If there had been an election’s worth of debate and policy documents talking up the planned budget, the markets may even have reacted differently. But she had none of that – she had a party divided, a press divided, and a risky, short-term emergency response to the situation with the public finances.

What is clear is that although the power of the state is very great indeed, in practice it cannot challenge the overall balance of class power, international market forces and the inbuilt advantages that accrue to the owners of capital. No secret cabal, no grand conspiracy: but the collective capitalist class lost confidence in their chief executive, and so as a result she was removed by the management board.

Pik Smeet

Editorial: We can put a stop to their games (2022)

Editorial from the December 2022 issue of the Socialist Standard

Those who like epic dramas have had a good show this year as prime ministers came and went, with other ambitious politicians supporting one or the other and changing sides as they calculated what was best for them in their bid to climb the greasy pole. On the other side of the House of Commons, the leaders of the ‘Opposition’ couldn’t contain themselves at the prospect this in-fighting opened for them to get to enjoy the fruits of office instead. It’s been a despicable spectacle.

As would-be administrators of the political side of capitalism — dubbing themselves ‘the government in waiting’ — the leaders of the Labour Party know that if they were in office their policy would not be, could not be, much different from that of the present Tory government. They criticise the government noisily but mainly for the personal behaviour of some of its ministers.

Even during the brief Truss interlude they agreed with some of what she did but balked at her crass decision, in the midst of a cost of living crisis for most people, to reduce income tax on the rich and remove the cap on bankers’ bonuses. Here too they merely echoed the views of her critics in the Tory party and who are now in office. Can anybody tell the difference between Starmer and Sunak?

The Truss interlude brought out the constraints that the operation of capitalism places on what the politicians in charge of the political machine can do when it comes to economics. They can’t do what they want. They must do what the operation of the market dictates. Given a chance to implement free-market ideology Truss failed spectacularly. Perhaps that will make her type less cocky for a while.

A Corbyn government would have failed too. When Corbyn was elected leader of the Labour Party, his opponents within the Party, realising that this ruined their chance of becoming ministers, immediately started to plot his downfall. They got their way and have since restored the Labour Party as a credible alternative management team for capitalism, a profit-driven system that can only work as such in the interest of the few who live off profits.

The result is that politics has been reduced to a competition between two rival bands of careerist politicians as to which is the more honest, competent and cost conscious. No wonder ‘I’m not interested in politics’ has become a widespread view. If that’s what politics is, we aren’t interested either.

Meaningful politics is a struggle about which class — the capitalist few or the wage-working many — should control political power. At the moment the capitalist few are winning. But if a majority wanted, they could do something more than just regard with contempt the politicians of capitalism and their antics. They could stop electing them and replace them with delegates mandated to use political control to help bring in a society based on the common ownership and democratic control of society’s productive resources, with production directly to meet people’s needs, rather than for sale or for profit.

Cooking the Books: Profits, profits, and profits (2022)

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

‘A Labour government’s priorities would be “growth, growth and growth”’ (Keir Starmer speech, 25 July).

‘I have three priorities for our economy: growth, growth, and growth’ (Liz Truss speech to Tory Conference, 4 October, Times, 5 October).

Growth is generally measured as an increase in GDP, or Gross Domestic Product. This can be calculated in a number of ways. The main one is to work out, for each industry, the difference between what was paid for materials and intermediate goods and what the product was sold for, and to add these all up. This is what statisticians call ‘value added’ (and is what VAT is levied on). It is not the same as cost of production, but is wage costs + the profit margin. Conventional economists are less keen to use this term as they have banished the concept of ‘value’ from economics (even if here it is only market price). On the other hand, it corresponds more to what Marxian economics would understand by the term – the new value created in production, which is divided into wages and profits.

Adding the income from work or from property ownership that individuals receive is a second way of calculating GDP. It gives a share of ‘labour’ in what is produced (though this also includes income from self-employment as well as from wages).

The third way is by adding up how this ‘National Income’ is spent: on business investment, consumer spending, and on government spending.

If GDP in one year is higher than it was the year before then there has been growth. GDP doesn’t always go up. It also goes down. In fact, statisticians and economists define a ‘recession’ as a fall, however small, in GDP in two consecutive quarters.

Most of GDP – around 80 percent – is consumed in the course of the year, by individual consumers or the government. The rest is invested mostly by businesses, with some by the government (as in infrastructure projects). The statisticians call this ‘gross fixed capital formation’.

‘Net fixed capital formation’ (which is the gross – or total – amount less the part used to replace the wear and tear of fixed capital) is the nearest to what Marx understood by the ‘capital accumulation’ which he saw as the aim of capitalist production. The source of this accumulation is the profits that come from business investment (including what the government invests, as this ultimately comes from taxing business profits). It is this pursuit of profits to accumulate as new capital that drives the capitalist economy and results in ‘growth’. It means that there can be no growth without a growth in profits.

Growth as such is not the driving force of capitalist production, but capital accumulation of which it is a consequence. The call for ‘growth, growth and growth’ is, therefore, a call for ‘profits, profits and profits’. The current Tory government makes no bones about this. Starmer is more mealy-mouthed but he too accepts that growth can only come about if the profits to sustain it are allowed to be made or, as he put it in his 25 July speech, if the government has a strategy that ‘builds confidence for investors that will boost long-term growth and productivity’.

Governments cannot bring about growth. They can try to create conditions favourable for profit-making but, beyond that, they have to wait for business investment to increase as capitalist production moves through its boom/slump business cycle. Sometimes they are lucky as Blair was and can claim the boom phase of the cycle as a result of their policies (though this went to Gordon Brown’s head and led him to claim that he had eliminated this cycle, not long before the Crash of 2008). Sometimes they are not so lucky, as both Truss’s successor and/or Starmer look like being.

Cooking the Books: ‘Ignorant and mistaken’ (2022)

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

The irony of it! A government with a free-marketeer Prime Minister and Chancellor punished by ‘the markets’. This normally happens to reformist governments that have promised to spend money on improving conditions for the workers. The 1929-31 Labour government was said to have been brought down by a ‘bankers’ ramp’. In France the term used was that such governments came up against a ‘wall of money’. Harold Wilson in the 1960s blamed ‘the gnomes of Zurich’.

The villains in question are international speculators – sometimes politely called ‘international investors’ – who buy and sell the bonds issued by different governments. Governments borrow money by selling bonds. These have a face-value and a rate of interest fixed as a percentage of this. Say, £100 at 5 percent. However, while the amount of interest payable remains the same (in the example, £5), the price at which the bonds are bought and sold on the bond market varies. So, if the price falls to £90 the interest is still £5, but 5/90 is 5.56 percent. If the price rises to £110, this ‘yield’ (interest/selling price) is 4.5 percent. When the government sells new bonds it has to take into account the yield on existing bonds and offer that as the rate of interest.

When on 23 September Kwarteng announced tax cuts to be funded by borrowing, the speculators perceived the new government as behaving like a reformist one. Cutting taxes without reducing government spending and covering the extra deficit by borrowing was seen as no different from increasing government spending by extra borrowing. So they sold UK government bonds. With more sellers than buyers, the price of these fell and the ‘yield’ went up, meaning that government has to pay a higher rate of interest to borrow.

This had an unintended side-effect. Some pension fund managers had been persuaded by clever City financiers to borrow money by effectively betting on the price of government bonds they hold not falling significantly. They lost the bet and were required to pay cash to settle. This they could only get by selling some of their bonds, so driving their price further down. To prevent the pension funds becoming insolvent and the risk of this leading to a wider financial crash, the Bank of England stepped in to buy bonds and keep their price up.

This was a classic case of how a central bank has to deal with a dash for cash – it makes more cash available to prevent the whole financial system clogging up. Marx came across this in his time. Under the 1844 Bank Charter Act, the Bank of England was allowed to issue money not backed by gold in its vaults only up to a certain amount. However, in the financial crises of 1857 and 1866 the Act had to be suspended to permit the Bank to make more cash available. Gordon Brown thought he had invented the wheel – and saved the world – when he followed this long-established practice during the Crash of 2008.

Marx’s comment was:

‘Ignorant and mistaken bank legislation, such as that of 1844-45, can intensify this money crisis. But no kind of bank legislation can eliminate a crisis’ (Capital, Vol 3, ch. 30).

Governments can’t make things better but they can make things worse, as we have just seen. Starmer tweeted that ‘the government has lost control of the economy’ (2.02pm, 28 September). But governments don’t control the economy. It’s the other way around, as he will find out if ever he gets the chance to have a go.

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.

For the Record (2022)

From the October 2022 issue of the Socialist Standard 

Here is what the new Prime Minister has promised her government will deliver:

‘I have a bold plan that will grow our economy and deliver higher wages, more security for families and world class public services’ (i paper, 3 September).

We record this so that it can be compared with what happens. Which, from past experience and a knowledge of how capitalism works, will be yet another failure to make capitalism work in the interest of the majority by delivering higher wages and world class public services. Wages and public services always take second place to profits as that’s the nature of the system. To those don’t believe us, we say wait and see.

Apparently, when she was younger she had other ideas. According to Private Eye (15 July):

‘Delegates who attended the 1993 Conference of the Liberal Democrat Youth & Students recall then-firebrand Truss arguing for, er, the abolition of money.’

Cooking the Books: Fairy-tale economics (2022)

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

Trussonomics – what has also been dubbed ‘fairy-tale economics’ – teaches, even preaches, that if you cut taxes on businesses, they will have more profits and so will invest more, increasing growth and average living standards.

Cancelling the increase scheduled next year in corporation tax from 19 to 25 percent and reducing employers’ National Insurance contributions will increase the amount of retained profits directly and immediately. Cutting other taxes and a corresponding amount of government spending (for instance, as floated, the reduction in the pay of public sector workers outside London and not giving out any more ‘hand-outs’ to people to help them try to cope with the soaring cost of living) would have the same effect but indirectly and over a longer period.

In recognising the importance of profits for ‘growth’, Truss is being realistic enough. Capitalism is a profit-driven system and does run on profits. Every government must take this into account and give priority to profit-making.

Where she departs from reality for fairyland is in imagining that, just because you allow capitalist enterprises to retain more of their profits, that will make them invest more. This is wrong both in theory and in the light of experience. Businesses will invest only if they think this will bring them more profit; if they don’t calculate that it will, then they won’t invest. And governments can do nothing to change that.

‘Growth’ is the increase in the amount produced in one year compared with previous years. It is conventionally measured by changes in Gross Domestic Product (GDP). Most of this – over 80 percent – is consumed in the course of the year by individuals or governments. The rest is invested in expanding or replacing productive capacity. Because GDP includes replacing the wear and tear of existing buildings, machines and equipment (depreciation), the investment part is not an accurate measure of the increase in productive capacity. Net Domestic Product (NDP), which excludes this, is more accurate, the investment part of which is near to what Marx meant by the ‘capital accumulation’ – the accumulation of profits as more capital – which he saw as the driving force of capitalism rather than growth as such.

Fairy Liz imagines that, after cutting taxes on profits, she can wave her magic wand and, hey presto, enterprises will invest and the economy grow. They tried this in France in the late 70s and early 80s. It didn’t work.

According to L’Express (8 September 1979), referring to Raymond Barre who was then the centre-right (the French equivalent of the Tories, if you like) prime minister:

‘One of the prime minister’s disappointments is that the improvement in the finances and profits of enterprises has not produced the expected boom in investment. The bosses are more and more reluctant to take risks. “Give us the money”, they said, “and we will invest.” Today, with their finances in a healthy state, they add “Give us the markets”. You can’t make an ass that isn’t thirsty drink. A head of an enterprise does not buy machines without outlets for the products they make.’

Barre failed because no government can conjure up the markets on which to sell what expanding capital investment could produce. Truss will fail too for the same reason, especially as the IMF, the Bank of England and many others are predicting a world recession over the next couple of years.

If these forecasts are right, what will happen is that businesses will say ‘Thank you very much. We can use the extra profits to increase the dividends we pay our shareholders. If you want us to invest them, give us the markets’. That, the government can’t do. So, no fairy-tale ending.

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.

Greasy Pole: Not Another Maggie Thatcher? (2013)

The Greasy Pole column from the June 2013 issue of the Socialist Standard

As the Iron Lady dissolved into ashes, something similar began to happen to her reputation, so lovingly nurtured, for strength, courage, honesty and humanity in her promotion of Britishness against any threats from without and within. First there were the biographies, in particular Margaret Thatcher: The Authorized Biography by ex-Sunday Telegraph editor Charles Moore, the publication of which was always intended to be delayed until after her death. This was as she had ordered: the co-operation Moore received was unusually generous on condition that her wishes in this were obeyed (in fact he was – still is – too ardent an admirer of hers to even dream of going against her wishes).

Then there was the TV programme Young Margaret: Love, Life And Letters, to which Moore was an important contributor, if an apparently embarrassed one. This revealed a rather different character with a talent for cynical manipulation when it came to human relationships. For example among a succession of unsuspecting man friends she at first cultivated a relationship with one she described as displaying ‘…the kind of naivety only a Scotsman can have’ but who owned a fair bit of land and profitable shares in industry. When Margaret had more promising prospects in sight, the farmer was briskly passed on to her sister Muriel who was thus made (we believe) happy ever after.

Such discriminatory skills were also applied in the matter of some other holidaymakers in Madeira who are derided as ‘…rather tatty tourists, Jews and novo rich.’ And rich among the examples of cold, calculating tactics is her view of her father, Alf Roberts the grocer from Grantham, once credited, as she worked her way up to the top of the Greasy Pole, as an enduring, invaluable example of parental guidance for a supremely ambitious daughter. After her mother died Thatcher had Alf move in with her but this did not yield the kind of advantages she had planned: ‘He is eating the most enormous meals and doing absolutely nothing except reading’ she complained to Muriel, telling her she intended to ‘shunt Pop off … will this be all right with you? Otherwise he will just hang on and on and not take any hints.’ A month or so afterwards Alf was writing to Muriel that he never heard anything from Margaret: ‘in fact I don’t think I know their new phone number.’ And then, unremarked, he died.

Tory MP

A spin-off of the post-mortem reverence for Thatcher was the requirement that any aspirant successor would have to be, apart from female, as scabrous as the Lady herself. It seemed a promising time for the emergence of Liz Truss, MP for South West Norfolk and recently promoted Parliamentary Under Secretary of State for Education. Although new to the game of Westminster politics – she was first elected in 2010 – she quickly attracted some notice, for example the assessment of her boss Michael Gove that she was ‘a minister to watch,’ and then the calculated flattery of Labour MP Sharon Hodgson that she had the ‘common touch of the Iron Lady about her …she may take it as a compliment.’ Truss could describe her parents as ‘to the left of Labour.’ As a child she was taken by her mother to CND demonstrations and one of her school essays was an anticipatory piece on the fall of Margaret Thatcher. At Oxford she joined the LibDems, making something of a name for herself with an anti-monarchist speech at their 1994 conference. It was a couple of years later that she found her true place in the Conservative Party and, after the usual couple of abortive efforts, as the party’s parliamentary candidate for South West Norfolk, where at her first election in 2010 she had a solid majority of over 13,000.

Reform

She had been a Deputy Director of Reform, a ‘think tank’ which calls itself independent and non-political but which was founded by a Tory MP and a former head of the political section of the Conservative Research Department. Its declared aim is to promote what it calls a ‘better way’ for public services and economic success through private industry and market de-regulation. It also works for the abolition of ‘pensioner gimmicks’ such as free TV licensing and the winter fuel payment. So when Truss was promoted to Gove’s team she was well placed to implement Reform’s ideas on ’higher standards’ in schools. For anyone with any doubts on the issue there was her paper Britannia Unchained which denounced British workers as ‘…among the worst idlers in the world’ with too many of them who ‘…prefer a lie-in to hard work’. A ’key plank’ in her intentions for nurseries is to work the staff harder by increasing their allocation of two-year-olds from four to six. At the same time she has been free with strictures on those workers because when she had inspected nurseries here ‘I have seen too many chaotic settings where children are running around. There’s no sense of purpose’.. Among the response to these comments, from parents as well as experienced child-care practitioners, the arguments against stricter discipline for children were flavoured with reminders that the level of morale in nurseries would be associated with low wages, poor working conditions and a lack of expectations for the future.

Affair

And it must be said that Truss has not always been so strict in applying sound principles to her own behaviour. After her adoption as the candidate for South West Norfolk there was a move to reverse the decision when it became known that some years before she had had an affair with Mark Field, the Tory MP for Westminster. Some of the local Tories, dubbed The Turnip Taliban, led by former High Sheriff of Norfolk, Sir Jeremy Bagge, argued that Truss was unsuitable as their candidate because she had chosen to conceal the matter, leaving them to find out through a Sunday newspaper article. In the event, the rebellion failed and Truss continued on her way to emerge as a hopeful to be the new Iron Lady – who might in fact have taught her of the necessity in politics to be ready always to suppress the truth while energetically promoting falsehoods.

Ivan