In Part 1, I set out why Marx's analysis shows why its not possible, under capitalism, for workers' wages, including the social wage, to be paid for by anyone other than the workers themselves. Of course, real wages, the standard of living rises over time, and that includes the social wage. But, that is a different matter. Real wages, the standard of living, rises, because social productivity rises. A given amount of labour produces an ever increasing amount of output. Suppose 100 units of labour produces 10,000 units of output. Of this, 5,000 units, 50%, is appropriated as profits by capital, and the other 5,000 units by labour. Ten years later, as a result of rising productivity, the same 100 units of labour produces 15,000 of output. Of this, the workers now obtain 6,000 units. Their standard of living has risen by 20%. However, capital now obtains the remaining 9,000 units of output as profit. Its share has risen not by 20%, but by 80%.
Marx describes this situation in Theories of Surplus Value, in his analysis of the work of Hodgskin. It is the difference between portion and proportion. Both capital and labour obtain larger portions, because output itself has increased by 50%, but the proportion of this total output obtained as profits has risen from 50% to 60%, whilst the proportion obtained by labour, as wages, has fallen from 50% to 40%. If we were to put it in constant money terms, the money wages of workers would have fallen, even though their standard of living has risen, whilst the money profits, as well as the actual physical quantity of output, obtained as profits will have risen. The rate of exploitation of labour rises, even as living standards are increased. This is part of the process that Marx describes as The Civilising Mission of Capital.
So, it is quite possible for the social wage, the actual amount of goods and services provided as Public Services, to rise, just as with the nominal wage, provided that social productivity rises sufficiently to enable it, but such rises in social productivity will also, simultaneously be the means by which the rate of exploitation of labour is increased, and so that an even larger share of the increased output is appropriated by capital as profits. The problem in Britain has been, over the last 30 years, since the time of Thatcher, that government policies have encouraged a low wage, including low social wage economy, that disincentivised capital from replacing labour with technology, and so has caused productivity levels to fall to very low levels.
Under Thatcher and Major, nominal wages were pushed down following the defeat of the Miners in 1985. As large swathes of manufacturing industry was closed down, higher paying skilled and semi-skilled jobs disappeared, and were replaced by a large number of unskilled, temporary, insecure jobs, and wages fell along with it. At the same time the social wage was cut. The Tories sold off state capital on the cheap; they sold off council houses that quickly fell into the hands of private landlords; they allowed public services to rot, in the same way that private landlords allow the properties they rent out to deteriorate for lack of maintenance.
I pointed out ten years ago, some of the delusions in relation to the Left and the NHS, but its also important, in current conditions, to note the point made there about variations in the public's satisfaction levels with the NHS. I quoted the Social Trends Survey,
“It found that the percentage of those satisfied with the NHS stood at 55% in 1983, and fell steadily until 1994, when it stood at 44%. It then fell again sharply down to 34% in 1997. After Labour came to power satisfaction rose steadily rising to an all-time high of 64% in 2009. But, it has to be remembered that, even to get to this figure, which is not even double the 1997 low, Labour had trebled the funding of the NHS! The figures also show that the highest degree of satisfaction (75%), was in the 65+ age range, with the level of satisfaction falling in each lower age range down to 61% in the 18-34 age range. This is understandable given that the NHS was created when the over 65's were in their formative years, and so most closely associate with it.”
As a result of ten years of Tory austerity, it has not taken long for them to undermine the NHS once again. But, it should not be thought that this automatically transfers into support for Labour's plans for the NHS either. As I pointed out, this is similar to what happened with Council Houses. Even with the trebling of funding for the NHS under the Blair/Brown government, it did not prevent the rise of MRSA infections, or the obscenity of what happened at Stafford Hospital and elsewhere.
I quoted the Patients Association Report “The NHS At 60”.
“61.1% of people used the NHS exclusively, with 25.5% saying they used both the NHS and Private Healthcare, 1.7%, only used private healthcare, with no response from the rest..
Interestingly, and keying into the points made by Aglietta, although GP's were the first point of reference for information on Health Matters, the Internet was the first port of call for 22% of respondents...
Although it was the largest number of the various alternatives, only 40% wanted to retain the funding of the NHS out of taxation. Half that number (20.2%) favoured a tax deductible Insurance Payment, whilst 13% favoured Co-Payments, and 7% favoured vouchers for healthcare up to a specific limit. The Patients Association favours the status quo, and provided no information on alternative methods of payment, but it was forced to recognise that put together the alternative methods formed a majority for change from the current system of payment out of tax. It also admitted that this was despite very little information or advertising to inform patients about these potential other forms of funding.”
Simply assuming that the threat of “privatising” the NHS will be enough to frighten voters into supporting Labour would be to make the same mistake as was made in the 1980's in relation to Council Housing.
The problem for Labour, therefore, is that, in order to increase real wages, including the social wage, it must bring about a large rise in productivity, but that rise in productivity requires that capital invest on a large scale to bring it about. Increasing nominal wages, and/or the social wage is one means of encouraging capital to do that, but the problem here is that Britain may physically be an island, but economically it is not. If UK wages rise rapidly, and/or if a UK government seeks to raise the Social Wage, paying for it via increased taxes on capital or profits, then, particularly large-scale capital, i.e. precisely that capital which has the capacity to introduce such large scale investment, and on which the economy depends, is likely to respond by simply moving elsewhere. In the context of Brexit, it will simply relocate to elsewhere in the EU. Labour could load more taxes on to those sections of capital that cannot do that, i.e. on to small scale, UK based capitals, but those are precisely the capitals that are already struggling to survive, and for which any additional costs from taxation, along with higher interest rates, will simply lead to them going bust.
Labour says,
“We will pay for this by creating a fairer taxation system, asking for a little more from those with the broadest shoulders, and making sure that everyone pays what they owe.”
As stated earlier, what this always means, therefore, is that it is one section of the working class that pays additional taxes, which are then distributed to others within the working-class. Its ridiculous to lump workers earning over £80,000 into the same category as multi-billionaires, whose unearned income each year, runs into tens of millions of Pounds. And Labour says,
“We will reverse some of the Tories’ cuts to corporation tax while keeping rates lower than in 2010.”
Capital will not look at the fact that Corporation Tax is lower than 2010, but only at the prospect of a rise. That is particularly true given that, as a result of the increased costs for business that Brexit involves, companies would be looking for lower rates of Corporation Tax, in the UK, not higher. The consequence of a rise in Corporation Tax will simply be that a smaller proportion of profits will go to investment, and a larger proportion will go in dividends to shareholders. It will, thereby, reduce economic growth, and the tax base, thereby undermining the government's ability to increase future tax revenues to finance its spending.
This whole problem is a symptom of Labour's social-democratic ideology, and this insistence on trying to resolve problems in the realm of distribution, via taxing and spending, rather than where it has to be tackled, which is in the realm of production, and the ownership and control of capital. As Marx put it, in the Critique of The Gotha Programme,
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labour power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”
So long as control of capital is in the hands of capitalists, of the ruling class, then any attempts to simply alter distribution relations, whether it is by workers being able to temporarily win higher wages, by the state increasing the social wage, or by the state raising taxes on capital, in order to redistribute it as benefits to workers, will simply result in the responses from capital described above. That remains true whether Britain is in the EU or outside it, but being outside the EU only makes matters worse for Britain, because it heaps additional costs on to UK businesses, and thereby slows capital accumulation. It illustrates once again why even a programme of progressive social democracy, let alone socialism is inconceivable outside the EU.
Labour says,
“VAT is a regressive tax that hits the poorest hardest and we guarantee no increases in VAT.”
Quite true, which is why Marx proposed scrapping all such indirect taxes, and replacing them with direct taxation such as Income Tax. Indeed, we should scrap other taxes such as National Insurance, which requires all the costs of collection, but whose receipts are pooled along with other taxes. If there is to be such a separate National Insurance Fund then it should operate properly as such, being completely separated from other taxation, and invested and audited so that we can see its performance, as with private pension funds and mutual funds. But, better still is Marx's proposal that such social insurance should be the preserve of the workers themselves, the money being put into funds owned and controlled by workers themselves. As I have said previously, if workers had control of the £1 trillion already contained in their pension funds, rather than them being under the control of the banks, then we could use those funds to significantly increase the power of workers in society. If in addition, we had the funds that should nominally be in the National Insurance fund, it would give workers even greater power, and we would be able to reject all of the demands from the state to increase the retirement age and so on.
But, Marx had other reasons for wanting indirect taxation such as VAT to be scrapped, and replaced by direct taxation. Marx was not a fan of the state, as he is often presented by the bourgeoisie. Marx wanted workers to see just how much of their wages was being deducted by the capitalist state. As he put it,
“Because indirect taxes conceal from an individual what he is paying to the state, whereas a direct tax is undisguised, unsophisticated, and not to be misunderstood by the meanest capacity. Direct taxation prompts therefore every individual to control the governing powers while indirect taxation destroys all tendency to self-government.”
None of this tinkering with taxation and distribution can deal with the underlying cause of inequality, which is the ownership and control of capital. Yet, the reality is that capitalism has itself already largely resolved this problem. The very process of capital accumulation, described by Marx, leads to capital as private property ceasing to exist. It becomes socialised capital. That process was largely accomplished even by the end of the 19th century, as private capital became transformed into cooperatives and joint stock companies. It is absurd that, in fact, Labour seeks to cosset the old less mature forms of small private capital, and to focus its attacks on the more mature form of socialised capital. That was illustrated in Labour's listing of Britain's supposed five worst employers today, all of which were drawn from the ranks of large companies. Of course, no one doubts that large companies can be, and are, guilty of some pretty shoddy practices, but does anyone really think that these companies are even close to being the worst employers in Britain? For one thing, a lot of the information was provided by the unions involved in those companies, yet in many of the 5 million small companies operating in Britain, you would never get anywhere near being able to even join a trades union, before the boss showed you the door!
In all of those 5 million small private capitals, it continues to be the case that the capital exists still as private property. It is the capital of the large joint stock companies that has already transcended that stage of development, and become socialised capital, and thereby as Marx describes it, the transitional form of property between capitalism and socialism. It is lunacy for a progressive social-democrat, let alone a socialist to favour the former as against the latter, and yet that is what Labour continually does as its populist rhetoric focuses on attacking “the rich”, and so on, rather than analysing and responding to the true nature of capital. Marx notes that this development of socialised capital, in the form of the joint stock company,
“is the abolition of capital as private property within the framework of capitalist production itself...
This result of the ultimate development of capitalist production is a necessary transitional phase towards the reconversion of capital into the property of producers, although no longer as the private property of the individual producers, but rather as the property of associated producers, as outright social property. On the other hand, the stock company is a transition toward the conversion of all functions in the reproduction process which still remain linked with capitalist property, into mere functions of associated producers, into social functions...
This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production.”
(Capital III, Chapter 27)
Capital itself, via the process of capital accumulation, and the concentration and centralisation of capital, has already abolished capital as private property in these large corporations, and turned it into socialised capital, the capital of the associated producers in those companies. All that is now required is to recognise this economic fact in law, and ensuring that it is those associated producers, the workers and day to day professional managers, in those companies, that exercise control over that capital, and not shareholders, who have no economical or logical right to exercise any such control, but yet who do exercise such control.
As John Kay and Aubrey Silbertson set out thirty years ago, the shareholders do not own the capital of the large companies. They are merely lenders of money to it, creditors like bondholders, landlords, lessors of equipment and so on. The interest/dividends they obtain on the money they lend is indeed, a payment of the price for the capital they sell to the company, and as with any other commodity that is sold, the buyer of that commodity expects to have full control over its use, and not have the seller continue to exercise such control. Instead of tinkering with taxation and distribution, Labour should simply correct this anomaly that is not even consistent with bourgeois property laws, and remove the right of shareholders to have any vote in company matters. Instead of expensive and unnecessary proposals to buy shares from shareholders, in a range of companies, Labour should simply reform company laws on corporate governance so as to ensure that the boards of all companies are elected 100% by the workers and managers in the company, and from the workers and managers within the company. Shareholders like any other lender of money-capital are entitled to a market rate of interest/dividend on the money-capital they lend, and nothing more.
As Marx describes above, in his Critique of the Gotha Programme, if Labour were to adopt this simple solution, thereby giving workers collectively control over this socialised capital, they could resolve all of these issues immediately. Workers would have a direct interest in using profits for investment in real productive-capital rather than using them for speculation in financial assets, for example. But, again, a Labour government acting alone, in a small, isolated Britain could never achieve this on its own. The first signs that a Labour government might act in this way would cause capital flight. Only if workers across Europe moved forward with such a programme could such resistance by capital be prevented and defeated. Once again this illustrates why any talk about a Jobs First Brexit is sheer fantasy.
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