There is an alternative
But only if we aim for working class rule across Europe, says Mike Macnair
This weekend’s huge demonstration is undoubtedly expressing profound and broadly based hostility to the Con-Dem government’s cuts. But a March 17 Mori poll for The Economist, as well as the arguments of the Labour leadership, show that the terms of the wider debate still remain how fast the government is cutting, not whether it should cut at all. The poll also shows that the big lie that the former Labour government is responsible for the deficit still has real purchase (believed by 49%), and Labour MPs are unwilling to be seen as ‘deficit deniers’.
This problem is, of course, a variant on the old Thatcher argument that ‘there is no alternative’. And the problem is that this argument is half-true. As long as politics starts from the ‘British national interest’ and ‘making Britain competitive’ within the framework of global capitalism, it probably is necessary to cut the deficit.
We can see this if we go behind the simple money issues. Britain imports vast quantities of food, since its agriculture cannot feed the population. The balance of ‘visible trade’ is in structural deficit, as it has been for decades. 95% of the fruit and 50% of the vegetables consumed in the UK are imported. In 2005 the UK imported £6.6 billion of agricultural products, £20.6 billion of mining and extractive outputs, £238 billion of manufactured products (including £18.5 billion worth of processed foods) and £442 million of electricity and gas. The UK exported £1.16 billion in agricultural output and £8 billion in processed foods. There is thus a yawning gap in the UK’s domestic food supply, which is made up by imports. In total, with other products, UK material imports totalled £270 billion. UK material exports totalled £210 billion. The deficit of £60 billion is at least partly made up by the UK’s financial income from the City of London and from remitted profits: that is, from the UK’s role in the world imperialist system.
The food imports are therefore - at the end of the day - paid for by the ‘invisible earnings’ of the City. This role is reflected in the fact that income tax on City earnings represents a very large chunk of the income side of the budget. City earnings are thus redistributed to civil servants, NHS workers, local government workers through block grants, and in various forms of subsidy to other capitals.
In this situation, Britain (meaning the City) is in competition with other financial centres for money flows (and related legal and accounting business, and so on). City fees skim income off these flows, and income tax at the higher rate skims government income off the City fees. London is an attractive financial centre for two reasons. The first and more immediate is that, though not fully offshore, it is relatively low-tax and low-regulation. The second and more fundamental is that London is low-risk. What this means is that uncontrolled inflation, expropriation (whether by political action or judicial corruption) and war risks are relatively unlikely.
Money flows are, however, highly volatile. We have seen this spectacularly in the financial crash of 2008-09 itself, and in one of its still-running results: the episodic spikes of panic over the risk of state defaults in the weaker euro-zone countries, which are still going on. Britain saw it on ‘Black Wednesday’ (September 16 1992) when the pound was forced out of the European exchange rate mechanism by short-selling.
It is, therefore, by no means impossible that if a British government adopted a policy they seriously disapproved of, market speculators could withdraw financial flows from London on a scale large enough to wipe out British ‘invisible earnings’ from the City and, as a result, put us face to face with the real deficit problem: the deficit in food supply and British dependence on imports. The risk is perhaps not as severe as Osborne and his cheerleaders argue; but it is not illusory. Hence Labour’s unwillingness to be seen as ‘deficit deniers’.
However, there is an infernal logic to the policy of maintaining or improving ‘British competitiveness’ and attracting money flows from which government can skim taxes. The imperatives which follow from it are to reduce taxes and regulation, and keep in check trade union and other collective action (hence allowing lower wages and longer working hours to flourish), in order to make the UK a relatively attractive place to do business. But other countries are in competition with the UK and it is entirely predictable that they will pursue the same policy. Thus, as long as the policy continues, this round of cuts (and this bonfire of collective agreements) cannot be and can never be the last round. The dynamic will - other things apart - continue until wages and conditions have reached Chinese or Indian levels.
Moreover, competition in cutting wages, benefits, regulation and so on as a competitive exercise has the long-term effect of reducing demand for consumer goods; which forces capitals to seek export markets, and - ultimately - protected export markets. Its long-term effect is also to reduce the political legitimacy of liberalism. If there is no socialist or communist alternative, the necessary beneficiary will be reactionary-irrationalist nationalism. This is already visible in Islamist forms in the Middle East, in Christian forms in the US, in secular far-right forms in (for example) Hungary, Italy and France. Hence, both by driving rivalry for markets and by driving a rise of irrationalist nationalism, the logical outcome of the policy of ‘competitiveness’ is great-power war, as seen in 1914 and 1945. We are as yet some considerable way off this outcome, but under present trends it will arrive some time in the next 50 years.
We can fight all the Con-Dems’ cuts as best we can and hope for partial victories. Labour cuts, however, would still be within the strategic framework of ‘British national competitiveness’ and still be subject to the infernal logic of capitalist competition between states. The strategic alternative is to start from a wholly different place: to aim for an economy of cooperative productive activities adapted to human needs.
In their book Imagine, Alan McCombes and Tommy Sheridan asked us to conjure up in our heads an independent ‘socialist’ Scotland, which would have an economy broadly Scandinavian in character to support a more generous welfare state and trade union rights, and a more democratic polity, than in Scandinavia itself. The idea was a manifest utopia. Attempting to implement it would result in reactionary consequences, as in Stalin’s ‘socialism in one country’ or - a nearer analogy - Pilsudski’s ‘Polish socialism’. This reactionary utopianism is equally true of attempts to create a socialist or an imagined left social democratic order in an isolated Britain, for the reasons given above: the trade deficit and in particular that in food.
The reactionary utopianism of both Scots and British ‘national socialisms’ reflects their authors’ claimed realism, just as Stalin’s ‘socialism in one country’ claimed to be more realistic than the alternative - proletarian internationalism. This ‘realism’ is, however, actually acceptance of the existing international state order and attempts to obtain marginal advantages for particular national groups within it.
Instead of imagining a ‘socialist’ nation-state, what we need to imagine is a unified international workers’ movement, based on solidarity in fighting for the common interests of the working class across national boundaries. Such a movement could aspire to take power away from the capitalist class internationally and begin the global construction of an alternative to capitalism.
Between continents, we can offer moral solidarity, but only very limited practical aid to one another’s struggles. Within continents, however, common working class political action is possible, and capitalism itself has set up supra-national institutions: the European Union, North American Free Trade Area, Mercosur in part of South America, the ASEAN economic community project in south-east Asia and so on.
Still imagining: a unified workers’ movement across Europe could take Europe away from capitalist rule. This would only be a first step to the global overthrow of capitalism. But it would be an immensely powerful first step, both because of the sheer scale of Europe - with a population of 822 million - and because it contains imperialist and other ‘core capitalist’ countries with highly developed material infrastructure and technical assets, as well as other countries whose economies have historically been subordinated to the capitalist core.
The scale of Europe, and the fact that it includes part of the capitalist core, means that following the overthrow of the capitalist class it would be less immediately vulnerable to war, blockade and financial ‘sanctions’ from the surviving capitalists than Russia was and third-world countries generally have been, or than any individual ‘advanced capitalist’ country would be (except perhaps the US, which as the biggest global exploiter of all is unlikely to lead the way in overthrowing capitalism). The high degree of capitalist integration through the EU, which effectively imposes its rules even on non-member states, makes it more transparently obvious than it is in other continents that workers need common action on a European scale. The historical strength and traditions of the European workers’ movement (although these have been gradually undermined by bureaucratic and nationalist leaderships over the last century), make workers’ power in Europe a serious project.
If we took power away from the capitalist class Europe-wide, what would that mean?
Under capitalism, social production is coordinated through money and credit. Human access to material goods and services is regulated through wealth in the form of money holdings. The financial crisis which has grown over into ‘austerity’ is a symptom of underlying disproportionalities in production, generated by the earlier boom, given the fact that money regulates access to material goods and that the supply of money must be limited. The crisis took the particular form it did because, in order to escape earlier crises in the 1980s-90s without a crash of the material economy, too much credit money was produced. This now fell to be devalorised: ie, if the money mechanism is to continue to function to coordinate social production, a lot of apparent money wealth has to disappear into thin air. People have to be made worse off, whether directly (savings evaporate, pension funds are worth less) or indirectly (reduced demand leads to factory closures and lay-offs; the state borrows a lot more money and hence has to raise taxes and/or cut expenditure to pay its debts, etc).
The communist alternative is to take collective control of production and regulate production decisions and access to material goods by direct, democratic decision-making. The implication is unavoidably that people who are presently wealthy in money terms will become less wealthy: no-one gets more than a decent living and the right to participate in social decision-making. The capitalists and managerial and bureaucratic middle class also lose their privileged access to decision-making. This is true whether this privileged access is simply through control of private property, through ‘careers’ and forms of patronage, or through control of money in the form of corrupt donations to political parties, corrupt control of the media and advertising expenditure, or corrupt ‘free market’ payments to lawyers.
Democratic decision-making is fundamental. What we need is a superior alternative to the haphazard coordination achieved through the capitalist market system. As the Soviet Union and its satellites showed, bureaucratic-hierarchical decision-making is not a superior alternative. Workers’ power as an alternative to capitalism therefore necessarily begins with the struggle for radical democracy against the mechanisms of capitalist political power - the bureaucratic hierarchies of the nation-states and the capitalist corporations which imitate them, and, in the EU, the supranational bureaucratic hierarchy of the commission, court of justice and council of ministers, and the anti-democratic treaties.
It also immediately means taking into public ownership under democratic control not merely shares in the banks, but the whole financial services sector. This relation between the financial sector and the state is one of the fundamental political mechanisms by which the capitalist class has control of the state.
Without radical democracy, public ownership is merely ownership by the bureaucratic-hierarchical state and the individual officials and managers: either a prop to capitalism or, if it replaces capitalism altogether, a regressive regime like Stalinism, destined to give way to capitalism. With radical democracy, the internal management - as well as the ultimate control of publicly owned economic institutions - has to be democratic: abolition of commercial ‘confidence’ and secrets, of state secrecy laws, of intellectual property rights, of the right of managers and leading committees to ‘confidentiality’ for the sake of ‘candour’ and so on, and the election and recallability of managers and their subjection to term limits.
If we took power away from the capitalist class Europe-wide, how would we reorganise the economy? The first thing to be said is that the decisions about what to do would have to be the decisions of the working class as a whole, not some schema imposed by the enlightened communist cadres against the will of the majority. We cannot predict with certainty what the majority would decide. We can, however, have proposals.
What follows assumes that the working class taking power in Europe does not mean the immediate abolition of money or ‘war communism’, but the creation of a contradictory relationship of collective production and small to medium-scale market production, in which the working class as a class is politically dominant.
In a crisis or recession, material production is shut down, as capitalists and smaller savers ‘dash for cash’, attempting to preserve as much as possible of the disappearing money value of their assets. The starting point of a communist alternative is that - on the contrary - material productive capacity has to be preserved until we collectively decide whether it is needed or should be scrapped. For example, the majority might well end up deciding that there are too many car factories and some of them should be closed down or converted to make something more useful.
The implication is that factories, etc, which are to be closed because they ‘cannot be run at a profit’ should neither be closed nor subsidised, but should instead be taken into public ownership or converted into workers’ cooperatives. The former owners should in principle only be compensated to the extent that failure to compensate them will leave pensioners or people with disabilities in hardship. (Non-pensioners who have been living on investment income can get jobs.) That said, the extent of compensation is at the end of the day a tactical question: at one end, it may be appropriate to expropriate without any compensation in order to punish attempts by individual capitalists to coerce the majority; at the other, in some cases generosity may be desirable for political reasons.
There is also no reason to retain private ownership in economic sectors which are either already monopolistic (mainly in infrastructure) or highly oligopolistic (the manufacture of cars, consumer durables, etc). The flow of profits to the private owners in these sectors is largely a rent charged on the rest of the economy.
The housing problem and its concomitant, property price bubbles in the US and elsewhere, was at the centre of the 2008-09 crisis and is a persisting ‘overhang’ affecting the current economy. The British government has leaned on the financial sector to postpone the inevitable wave of defaults and foreclosures, but in due course they will feed through.
Public ownership of the financial sector, proposed above, automatically implies public ownership in the large majority of cases of the mortgagee’s interests in mortgaged property. This should be extended to all mortgages. Within this framework, it is possible in an orderly way to cut the capital and interest liabilities incurred at the height of the property bubble down to levels consistent with needs (ie, the replacement and repair costs of buildings, etc).
Engels argued back in 1872-73 that renting was more in the interests of the working class than freehold mortgage. The enormous expansion of freehold mortgage since World War II has been the product of deliberate state policy aimed at creating the “property-owning democracy”: its outcome is the property bubble of recent years and the pain of growing numbers of foreclosures affecting US workers (and soon, probably, British workers).
But for the alternative - renting - to be attractive, we need to replace both private landlords and bureaucratic-hierarchical public landlords. As far as the private landlords are concerned, their interest, like that of other monopolists, needs to be replaced by public ownership. In relation to public landlords, what is needed is democratically controlled public ownership housing; and a housing system which also respects the genuine human need for individual and group self-expression in relation to housing: ie, does not rely on bureaucratic micromanagement.
This aim requires - as Marx says of a post-capitalist economy generally - “continuous relative overproduction”. That is, there is a need to plan for a permanent oversupply of a substantial range of housing types (and, consequently, for staffing to maintain vacant housing) in order to achieve flexibility. Hence, while money values in housing are falling, the common interest of the working class requires the opposite judgment: that more resources should be put into housing.
I could go on at length to a range of other issues. Several are discussed under the heading ‘Immediate demands’ in the CPGB’s Draft programme. But I think I have said enough to make the point. With common action of the workers’ movement to take power on a European scale, we could get rid of capitalist rule on this continent, on the road to getting rid of it worldwide. Getting rid of capitalist rule implies replacing it with radical, extreme democracy, through which Europe’s hundreds of millions can take common decisions about our common future. To do so opens the way to fundamentally different approaches to the questions posed by the economic crisis, like - in the examples given - banks, bankrupt companies and the house-price bubble and foreclosures.
I began this discussion of Europe with Alan McCombes, Tommy Sheridan and Imagine. It was appropriate because we are nearer to workers’ power in Europe - which is possible, but needs imagination to think about it - than we are to an ‘independent socialist Scotland’, which is a utopian delusion. I have not presented an elaborated ‘vision’ of a workers’ Europe, like Imagine’s vision of an ‘independent socialist Scotland’. That is partly a matter of space, but partly the difference between Marxism and utopian socialism: Marxism is about the working class as a whole taking the fundamental decisions, and that means - as I have said above - that the detailed shape of the future society is not predictable.
But we do still need to imagine the goal of a workers’ Europe on the road to the global overthrow of capitalism. If it is nearer to us than an ‘independent socialist Scotland’ or a ‘socialist Britain’ (or the Eurosceptic economist-Trotskyists’ ‘British workers’ state’), it is still some way away. The workers’ movement, from the trade union and Labourite tops to the economistic far left, remains dominated by national horizons.
To aim for this goal is thus to aim high: at the opposite extreme from the absolutely minimal aim of slowing down the cuts represented by Ed Miliband and co. But to aim high will, in fact, make it more likely that we can win partial victories.
We can win concessions if we persuade the state elite and the capitalist class that there are worse alternatives than concessions. The British state defeated Chartism partly by repression, but also by concessions (for example, the Ten Hour Day Act 1847). It responded to the association of early trade unions with the First International in the 1860s, and forcible forms of strike action, with more concessions: the extension of the franchise to the top layer of skilled workers in 1867 and the legalisation of trade unions in 1871.
Across Europe in 1945, in France post-1968 and to some extent in Britain in the 1970s, the capitalist class was persuaded, by working class political action which amounted to less than overthrowing the government and less than overthrowing capitalism, that the actual overthrow of capitalism was in prospect. Because they were persuaded that this was in prospect, they were also persuaded that it was a better option to make big concessions in order to head it off.
At present the state elite and the capitalist class are not persuaded of anything of the sort. The phenomenon of generational replacement means that the people who lived through the 1930s and the 1940s are now out of politics and deep into retirement; and those who remember the rise of the shop stewards’ movement and militant action from the 1960s-70s are also getting towards retirement age. The present ministers remember Thatcherism from their youth and celebrate it. At the moment they cannot imagine being confronted with really serious resistance.
It is possible, with sufficiently serious resistance and a political alternative (even a very imperfect political alternative, like the Left Party in Germany) that the capitalist class will back off from these cuts and make concessions, even if it is not really the case that we are about to take power. (After all, it was not really the case that the working class was about to take power in France in 1968 or in Britain in 1974.) We might scare them sufficiently to force concessions.
But in order to do that we need political action on a European scale. The reason is that, as long as the austerity consensus holds across Europe, any individual country which makes concessions to the working class will face a flight of capital. Action on a European scale could break the consensus. This idea is not at all unrealistic: we have already seen widespread mass action in individual countries across Europe. The obstacle is the nationalist character of the social democratic and ‘official communist’ leaderships.
But we also need people to be positively arguing for the overthrow of capitalism. Why the capitalist class perceived the overthrow of capitalism to be on the agenda in 1945 is obvious: Soviet troops reached the Elbe. The reason they perceived it to be on the agenda in the 1970s was also due to international considerations - if the USSR was militarily very much weaker than the US, the latter had not attained the capability it sought of a first-strike without effective Soviet response; the US was being defeated in Vietnam, the UK had been defeated in Yemen, and the insurgencies in Mozambique and Angola brought down the Portuguese regime. The mass actions of the late 1960s and early 1970s, though nationally limited, were global in range. And they took place in the context of there being large-scale ‘official communist’ parties, large Maoist splinters to their left and substantial Trotskyist organisations, all arguing at least formally for the overthrow of capitalism.
For all these reasons we should aim high - even if we have a long way to go before a European alternative is possible. Yes, we should fight every cut, every attack on wages, working conditions and pensions, every privatisation and so on. But to get real concessions the state elite and the capitalist class need to be put in fear. And to put them in fear means aiming much higher than a breakdown of the coalition and a Miliband government. It means aiming for working class rule Europe-wide.
- www.politics.co.uk/news/economy-and-finance/public-want-slower-spending-cuts-$21387853.htm ; ‘Labour MPs fear ‘deficit denier’ label’ Financial Times March 22.
- Figures from www.uktradeinfo.com/index.cfm?task=eubackcast
- More in Jack Conrad’s articles in the Weekly Worker, some collected at www.cpgb.org.uk/theory/ssp.htm
- This is very much an outline. More in Jack Conrad’s Remaking Europe (2004) - online at www.cpgb.org.uk/books/Europe%202.htm
- ‘Foreclosure’ is a term of art of Anglo-American law, technically obsolete outside some US jurisdictions, but convenient traditional shorthand for the process by which the defaulting borrower is evicted in the interest of the lender.
- On the housing question: www.marxists.org/archive/marx/works/1872/housing-question/index.htm
- K Marx Capital Vol 2, p469; Theories of surplus value Vol 1, pp359-60.