The Cuts Who Benefits?

The Commune have a Public Meeting on 3rd November in Sheffield, on the subject - "Welfare Capitalism And The Cuts"

The questions they are posing are important.

1 Are the cuts an economic necessity?

2 Will the cuts smash or restructure the Welfare state?

3 Do we simply defend the welfare state?

4 Can trade unions defend jobs and services?

They are questions I have addressed here, and in comments at the Commune, at AVPS,
and at The Weekly Worker, amongst other places.

My simple answers to these questions would be.

1. No, the cuts are not an economic necessity, as I've outlined here. In fact, a look at Ireland shows that the consequence of the Cuts is likely to be to reverse the economic growth that had begun, send the economy into a sharp recession, and to undermine the very basis for being able to pay down the debt.
The fact, that similar policies are being adopted by other Governments, and could be adopted in the US, if the Republicans, under pressure from the Tea Partiers, win the elections next month, I think signify that, along with this sharp recession, will come a serious and brutal restructuring of Capital. That restructuring would take place anyway, but would have been more drawn out. I am in the process of producing a blog that will elaborate on this.

2. Every developed Capitalist economy developed a Welfare State, during the 20th Century. I've referred to Engels argument that by the latter part of the 19th Century, Big Capital had adopted the programme of Social Democracy.

Its strategy revolved around the idea of a social democratic consensus, of social justice and all that entailed. It gave workers the vote, it introduced legislation on Health & Safety, and on working hours. It embraced Trades Unions as a channel for transmitting its own ideas about social harmony into the working class. In part, as Engels says, these measures reflected the fact that this Big Capital had surpassed the days when it made profits by means of screwing every last minute out of the workers - Absolute Surplus Value - in favour of the more effective means of Relative Surplus Value - reducing the Value of Labour Power by cheapening wage goods. But, in part, as he says, this increased role for the State, and introduction of these rights for workers, also worked to its advantage, as against its smaller competitors, who still relied on the old penny pinching forms of exploitation.

At the end of the 19th Century/beginning of the Twentieth Century, workers had developed a series of their own organisations, besides the Trades Unions. They had Friendly Societies, in which they accrued funds to provide for unemployment, sickness and old age.
They had Retail Co-operative Societies that had grown to dominate the retail sector for provision of workers basic needs, and which had also established its own Wholesale Society, as well as a range of production to supply them. The Co-op also provided, Education, and Welfare Benefits for its workers and members. Workers also organised their own adult education via the Plebs League and the National Council of Labour Colleges, which it opposed to the WEA set up by the bourgeoisie to try to impose bourgeois ideas on workers.

It was no surprise that Capital responded to independent workers organisations by using the power of the State to impose its own provision on workers, and to undermine the independent workers provision. The Liberals introduced National Insurance which soaked up workers funds with the promise of a State Pension.
In the 1920's the Tory Neville Chamberlain introduced further welfare reforms to protect the poor and provide a social safety net, and essentially laid the basis for the Welfare State. The Liberal Beveridge codified all of that, which was introduced by the post-war Labour Government.

Modern capitalism needs a healthy and well educated working-class. It needs to ensure that workers devote sufficient funds to buying those commodities to that end. State Education, and a State run Health System ensure that workers get, and pay for, the level of Education and Healthcare that Capital deems necessary at any particular time.

Capital has every incentive to try to ensure that the provision of these commodities, and the others provided by the Welfare State, are provided as efficiently as possible - around 40% of workers wages go in "taxes" of one form or another to purchase these commodities - they form a significant component of the Value of Labour Power, so Capital wants to reduce that cost as much as possible. But, it does not want to reduce the cost at the expense of quality. Cheaply, but poorly, educated and repaired workers are of no more use to Capital than shoddily produced materials or machines. The European model of socialised provision appears to be the best solution Capital has come up with. It combines a State Run Insurance Scheme with actual provision, of Healthcare at least, by large private companies who compete to drive down costs and raise quality. France, which is generally considered to have perhaps the best healthcare system in the world, is an example of that.
The idea that Capital would move to this kind of model was theorised back in the 1970's by Aglietta in "A Theory of Capitalist Regulation:The US Experience" (1979) where he describes the moves in Europe, which he describes as Neo-Fordism.

I have also referred to the way Big Capital, in the US, is looking to the State to intervene to lift some of these burdens from its back and transfer them to the State. It is consistent with the general practice of Neo-Liberalism of socialising costs, and privatising profits, what has been termed "Socialism For the Rich". In a 2005 article in the US "Fortune" Magazine, Matt Miller wrote,

“But seen in this context, the prescription-drug bill last year was the first step in the Republican-led socialization of health spending. Companies have been clobbered funding retiree health plans. The GOP felt their pain, and presto, $750 billion over ten years moved from private to public budgets...

The bigger hurdle may be stereotypes. Business's sensible drive to get Uncle Sam to take on more of the health burden will run into the nihilistic (but potent) "big government" rhetoric of the GOP--plus the party's delusion that we can keep federal taxes at 17% to 18% of GDP as the boomers retire. If Republican pols want to help Republican CEOs solve their biggest problems, this caricature of a political philosophy will have to give way to something more grown-up. Just as the Nixon-to-China theory of history says it will ultimately take a Democratic President to fix Social Security, it may take a Republican President to bless the socialization of health spending we need. ..Ask yourself: When we're on the cusp of decades of wrenching challenges from places like China and India, doesn't American business have enough to do without managing health care too?”

Fortune.

So, the answer is that Capital, having spent so much time and effort constructing the Welfare State, has no desire to scrap it, but it will be restructured where greater efficiency can be obtained.

3. The answer, to point 3, should be obvious from what I have said. Of course, we have to defend what we have in so far as it comprises part of workers living standards. But, what we defend is the idea that there are certain things such as Education, Healthcare, Social Care etc., which should be provided by society, and, as far as possible, should be made available on the basis of need not on the ability to pay.
But, Marx always made clear his distinction between "Society" and "The State". When he spoke about "Society" in these terms he was talking about the working class acting collectively to make its own provision.

The Capitalist State is huge, and these aspects of it are equally huge. It would be Utopian, to believe that workers could immediately establish their own alternatives to such provision. There are examples of workers coming together to create schools, under their ownership and control, and the Co-op itself is entering this arena. There are even examples of hospitals being taken over by their workers. But, isolated pockets of worker ownership are likely to suffer from diseconomies of scale, and be subject to all the pressures of operating within a Capitalist environment. The answer to the question is no, we should not simply defend the Welfare State. We should demand that, at the very least, it be made open and democratic, by real workers and users control. But, the Labour Movement, in particular the Trades Unions and the Co-op should combine, to use the power and expertise of both wings, to develop a strategy to bring as much as possible under the direct ownership and control of workers and users, because that is the only way of ensuring that real control can be exercised, and the interference of the State can be minimised.

4. It is clear that Trades Unions can defend jobs and services, but only within limits. The experience of UCS is important here, as I set out in my blog, The Lessons Of UCS. The workers work-in succeeded in stopping the closure. But, by handing the yard to the bosses state, the workers ultimately lost.
The State rationalised, and the workers exchanged exploitation by Private Capital for exploitation by an even more powerful State Capital. Even at a Trade Union level, the jobs saved came at the cost of thousands of jobs lost elsewhere in the industry. It is the same lesson as that of workers in France, in May '68, who, were demobilised, having taking over their factories. As Marx demonstrates, ultimately, as long as workers remained trapped within the Capital-Labour relation, Capital will win such struggles. In the 1960's and 70's printworkers resisted the attempts of management to impose new working practices. In the end, in the 1980's, new bosses, like Eddie Shah, came along, armed with brand new technology that did away with the need of the skills of the skilled print workers, undermined the basis of their strength, and, by setting up on new sites, were able to recruit non-unionised, unskilled labour.

In the Public Sector, things are more complicated. On the one hand, the Public Sector is where the vast bulk of union members exist, and it has strength from that. But, in some ways, Public Sector workers have become like a new Aristocracy of Labour, and the divisions that creates, within the working-class, can be exploited by Capital. Moreover, as Greece and Spain has demonstrated, at a time when the State is looking to reduce its expenditure on Public Services, and on wages, it is not clear that strikes do anything other than play into the hands of the bosses, which saves money as a result of those strikes. As Engels put it,

"and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends."

If we are to win, we have to develop more intelligent tactics and strategies than just strikes and "more militancy". The TU bureaucrats are happy to pursue such a strategy, because it is consistent with emphasising their role as negotiators and middle men. It keeps the struggle wholly within the bounds of bourgeois ideology, with no threat to the sanctity of Capitalist property. Most of the sectarian Left is happy to follow such a course too, because they have no other immediate solutions to offer, and they hope, by involving themselves in such strikes, to incrementally build their organisations. But, Marxists have a duty to go beyond the narrow concerns of the sects, to offer workers immediate practical solutions, which at the same time take care of the interests of the movement in the future, as the Communist Manifesto describes it. That means that Public Sector workers, in the unions, have to link up with the wider working-class, and, instead of allowing the struggle to be confined to one about simply protecting jobs and services, transforms it into a struggle also about the nature of those services, and who should own and control them.

The lesson of UCS was that, in not just occupying, but also reducing the Capital that previously dominated them, back to its rightful status, as mere tools, and means of production, the workers stepped outside the Capital-Labour relation, they broke the hold of Capital over them, and challenged the sanctity of private property, private property which they, and other workers, had actually created, but which was used against them. Instead of strikes, we need to build the greatest unity between public Sector Workers and Service Users. Rather than strikes, to deny users of their services, we need occupations, and work-ins, to ensure and demand that services continue to be provided. And having shown, in practice, that workers, themselves, can provide these services efficiently, without the need for private or state bosses, we should demand that the reality be stamped with legality, that the workers ownership and control of these services be formally recognised by the State.