Labour's Manifesto

In coming days, I will look at Labour's Manifesto, in more detail, along with the Grey Book, setting out the costings.  As a first impression, it is a traditional reformist, big state, tax and spend programme.  All of the talk by Labour's opponents about Marxism are ridiculous hyperbole.  Indeed, its precisely because it is not a Marxist programme that the deficiencies within it lead to problems, not least the problem referred to recently, that by posing as being a radical programme aimed at a significant transfer of wealth and power, it is likely to create a backlash against, which Labour's parliamentarist and reformist politics is ill-equipped to respond.

The big state, tax and spend, reformist programme presented by Labour faces the same problem that all such reformist programmes have faced in the past.  It attempts to deal with the capitalist tiger by removing one claw at a time.  The last time a programme of this kind was attempted was by Francois Mitterand in France, and the response of capital was to engage in a capital strike, and to move their wealth and capital overseas.  That shows why even any such radical social-democratic programme, let alone socialism is only feasible on an EU wide basis.  Of course, capital across the whole of Europe, could, in theory engage in a capital strike, or attempt to move its wealth and capital elsewhere in the globe, but given that the EU economy is the largest in the world, accounting for around 28% of global GDP, in practice, that is not possible.

It is, however, more than possible for capital to simply leave the UK, which accounts for only around 3% of global GDP, and to move elsewhere in the EU, to the US, China, Japan and so on.

In that context, one part of Labour's programme is puzzling.  Labour proposes to introduce a two-tier Corporation Tax system.  Large firms will pay 26%, whilst small firms will pay only 21%.  This they say will raise £24 billion by 2024.  They intend to introduce further changes that will draw in a further £6 billion from multinational companies.  This is bizarre.

As a result of Brexit, Britain is already likely to see large companies, particularly multinational companies, moving their operations out of Britain and into Europe.  So, on what logical basis would you then want to encourage them to do that even further, by raising taxes on them, and indeed raising taxes on them more than on smaller companies?  After all, it is the large companies that most easily can shift their operations out of Britain, and into the EU, or elsewhere.  It is the small companies that cannot afford to do that.  It is the small companies, particularly the very small companies that cannot engage in a capital strike, or relocate their operations.  If you want to tax capital that cannot engage in capital flight then the companies you need to hit hardest are the smaller ones!

After all the economic future of the country depends upon the large companies not the small ones.  It is the large companies that control the dominant share of the economy, with the smaller companies being subordinated to them, dependent on the large companies for the orders sent to them, for work in sub-contracting etc.  Without the big, particularly multinational companies, the orders for components and supplies to the smaller companies, the money spent from wages by workers in the big companies, with the small scale businesses will disappear, and the small businesses will disappear along with it.  Just look at what happens to local small businesses when a large local company such as a steel mill, or a car company closes down.

It is the big, particularly multinational companies that are the ones that bring in new technologies and production systems; it is the big companies that raise overall productivity levels; it is the big companies that pay higher wages and provide better conditions, putting upward pressure on wages and conditions for the smaller businesses; it is the big companies that provide training and education for their workers, raising the general skills level of the country; it is the big companies in which workers can best organise in trades unions and so on.

The county's future depends on these big companies, and yet Labour's programme is aiming its fire at them, and giving favoured treatment to smaller companies, the ones that are responsible for holding back productivity growth, for pursuing anti-union policies, paying low wages, and providing poor conditions, not to mention being the core base for the Tory Party and for Brexit.

The Tories of course and their ideologists continually bleat about it being small business that is the backbone of the economy, but it is complete nonsense, and there is no reason why Labour should be taken in by it, or why it should favour these reactionary sections of capital as against it more progressive sections.  Again it stems from the Stalinoid ideology of Popular Frontism, and the concept of the "anti-monopoly alliance", which involved this kind of alliance with the small reactionary sections of capital against large scale capital. 

Of course, its true that there are 5 million businesses in Britain, and the vast majority of them are small businesses, the majority of them being very small, such as the individual window clean, gardener, domestic house cleaner, dog walker and so on.  Many of these individuals are people who for one reason or another could not get a permanent full-time job, and sank into this self-employment as an alternative.  Of those slightly above this position they survive by overworking any employees they might have, including often other family members, by paying low wages and providing poor conditions, by shady business practices and so on.  Trotters Independent Traders was a good caricature of this section of the small business class.

But, the truth is that 75% of these small businesses go out of business within the first five years.  Looked at rationally the capital and resources tied up in these almost inevitably failing business is a total waste that could have been more effectively used elsewhere in the economy.  labour's programme effectively seeks to bail-out, this low productivity, failing sector of the economy at the expense of the more efficient, higher productivity, higher profit section of the economy.

Labour's policy is completely back to front, and appears to be driven by its dogma of wanting to be seen to be attacking the rich, rather than being driven by any kind of logical strategic plan.  It is typical of the approach of left populism, and everywhere it has been applied it has failed.