Britain is facing multiple crises all of which are the consequence of government policy over recent years. They are the consequence of Brexit, of fiscal austerity and QE, and of lock downs and lockouts. We have crises relating to soaring prices and shortages resulting from Brexit and from lock downs and lockouts: we have crises of
labour shortages due to Brexit; of surging inflation due to QE, and from the effects of decades of underinvestment in infrastructure and training, intensified, after 2010, by fiscal austerity. But, the solutions to these problems put forward by the reactionaries of the Tory Party, and the conservatives of the Labour Party are inadequate, irrelevant and, from the perspective of the interests of workers, idiotic. That is not surprising given that it is the policies of those parties, now again being pursued by them, which created those crises in the first place!
From the 1980's onwards, the Tory Party, increasingly captured by its reactionary petty-bourgeois base of small business people, shifted the economy towards the interests of those people, symbolised by Thatcher's shift from being a champion of an EU Single Market to being a champion of the Eurosceptic Right. It adopted all of the mindset of the
Rachmanite landord, letting the fabric of the building crumble as it attempted to screw more and more
rent out of the tenants, and which looked increasingly towards the capital gains it could get from rising asset prices rather than the creation of real wealth. That was symbolised by its scrapping of credit controls and financial regulation in the
Big Bang of 1986, and its encouragement of rampant borrowing and speculation to push up those asset prices, be they shares and bonds or property.
The combination of the two, allowing the fabric of the society to rot, whilst simply cashing in on rising asset prices, and borrowing against them, was the classic method of the
asset stripper. In the world of finance and speculation, it was symbolised by the plethora of
Ponzi schemes that developed throughout it. As the inevitable crises arising from that manifested itself, in a series of financial crashes, as inflating bubbles repeatedly burst, the response of the reactionaries of the Tory Party, and its outliers in UKIP, was to simply double down on their nationalistic solutions, exemplified by Brexit.
But, the conservative
social-democrats of New Labour also adopted the same underlying ideas. New Labour also believed that labour was not the source of
value, and of wealth creation. Like the reactionaries of the Tory Party, it too saw rocketing asset prices, and the ability to
“take profits” from them, and to borrow against them, as the means of creating value and wealth. I set out in posts, years ago, how, in the mid 2000's, as a County Councillor, I had warned that it would end in tears, including in a heated debate, one lunchtime, in the pub with the Labour Deputy Leader of the Council, an estate agent, who had been professing how wonderful it was that so many people had been able to get into so much debt, in order to buy such grotesquely overpriced houses. That was just a couple of years before the start of the debt crisis in 2007, and the Financial Meltdown of 2008.
But, why wouldn't he feel that way, because, after all, it was also the mindset of Blair and Brown to borrow on the back of these inflated asset prices. The only difference between those conservatives social democrats, and the reactionaries of the Tory Party was that Blair and Brown wanted to use the realised capital gains, and the borrowing, to spend on elements of infrastructure, to modernise the economy, and to spend on public services such as the NHS. It was that which demarcated the reactionaries from the conservatives, but the reality was that the conservatives of New Labour were still basing themselves on a delusion, whose symbol has become
The Magic Money Tree.
Part of the crises faced, today, is a direct result of the policies adopted during that period. On the one hand, the deliberate neglect undertaken by the Tories between 1979 and 1997, created all of the problems of an economy with an inadequate infrastructure, inadequately trained and educated workers, and with terribly low levels of productivity compared with its global competitors. The reactionary, small business owner mentality of the Tories based upon low
wages, poor conditions and so on – symbolised by the Tories support for Enterprise Zones, where even minimal regulations could be avoided, was carried through into their hostility to Europe and the mantra of
“taking back control”, so as to avoid its minimal regulations, and protections for workers and consumers and citizens.
On that too, the conservative social-democrats of Labour were demarcated in policy, whilst joined at the hip in terms of underlying assumptions. They sought to impose higher regulations and conditions, but always mindful to do so on the basis of state action, and not on the basis of giving workers and their trades unions the ability to implement such conditions. They militantly refused to overturn the anti-union laws introduced by Thatcher, and even as they sought to attach Britain more closely to the EU, in the interests of large-scale
capital, and, more specifically, the interests of the share and bondholders of that large-scale capital, they were diligent in ensuring that they, like Thatcher, sought opt outs for British capital, when it came to things like implementation of the
Working Hours Directive, and other elements of Social Europe. Nothing could be done that would spook the speculators, and the upward movement of inflating asset prices.
They were facilitated by the fact that they were not alone. In the 1980's, Thatcher was not a lone horsemen, but was joined by the cowboy Reagan, whose regime followed almost identical policies, as the Republicans, like the Tories, was captured by its reactionary, small business class membership and voters. And, as Thatcher was replaced by Major and then Blair, so Reagan was replaced by Bush, and then Clinton, again following the same policies, based on the same delusion that wealth was generated by rising asset prices, not from labour, and the creation of new value. That conservative social-democrats, as much as
reactionary liberals, should be easily enthralled by such a delusion is no surprise, because it simply reflects the fear that such elements have always had. If it is once recognised that new value is created only by labour, and not by capital, if it is recognised that real wealth is also the result of the actions of labour in conjunction with the free gifts of Nature, then the ideological basis of capitalism itself, in either its reactionary liberal, or its conservative social-democratic variants is unsustainable.
If those truths are recognised, then how could it continue to be justified that a tiny proportion of society that owns capital, be it in the form of privately owned productive capital, or privately owned
fictitious capital, should be able to appropriate that value and wealth created by the workers who form the vast majority of society, let alone that, as a result of that, this tiny minority should use that position to appropriate to themselves such a grossly disproportionate amount of the
revenue arising from such production? The idea that it is capital, not labour that is the source of value, has been the vital lie that the apologists of capitalism, be they reactionary liberals, or conservative social-democrats have had to purvey from the first days that representatives of the workers, like
Hodgskin, began to pick apart the arguments of bourgeois political economy, and its inherent contradictions.
And, so, when the lie was repeatedly exposed, as the fictitious wealth of the asset price bubbles, went up in ever more spectacular flares, each time those bubbles burst, so the illusion had to be restored, by the state intervening on an ever larger scale to reflate those bubbles. At first it did it by central banks simply reducing their policy rates, the rates at which commercial banks can borrow from them, so that those banks could speculate on an ever larger scale in the purchase of property and fictitious capital. As it became clear that this
Greenspan Put, meant that this was a one way bet, where the gambler could never lose, it was not just commercial banks, or the super rich top 0.01% that were induced to engage in such speculation.
The executives of large companies could see that they could make more
money from capital gains, by using company
profits to buy shares and property than they could by using those profits to expand the business, actually employing and training workers, and producing the goods and services that actually constitute the real wealth of society. No wonder, then, that, today, we face such a problem of a decayed national infrastructure, as well as a low skilled, poorly educated workforce, unable even to take on jobs such as lorry driving, care work, hospitality and so on, let alone all of those high-skilled, high value jobs that are the basis of the future economy. But, it was not just those executives and the super rich engaged in such gambling. Anyone who had spare cash was drawn into it. The small business person, or the pensioner who found that the
interest on their savings was insignificant could see the attraction of putting money into a mutual fund, or else of buying some terraced house to rent out, while they waited for its price to rise, and provide them with such capital gains. And, those who saw property prices inexorably rising further and further out of reach, were led to think that they had to buy a house, even at these increasingly ludicrous prices, before they became even more ludicrous. In other words, the classic,
bigger fool dynamic of the bubble.
And, the other consequence of that was inevitably that the inequality in society now took the form not just of an inequality of income, but most importantly of an inequality of wealth, in the form of these ever inflating assets. It was not just that ever higher house prices meant that those who already had one saw their paper wealth increase, whilst those that didn't saw the value of any savings and income they had continually devalued against it, it was that those that could not afford a house had to rent, and as property prices continued to inflate, so landlords continued to raise rents, so that the disposable income of renters was then continually diminished. The idiocy of that has been illustrated by the fact that, as those rents became ever more unaffordable, the state has had to provide ever larger subsidies. Today, more than £30 billion a year is paid out in Housing Benefit that goes straight into the pockets of landlords, and yet they produce not one penny of additional value in the economy, not a farthing of additional real wealth.
The conservative social-democrats of New Labour also created the conditions in which, the reactionaries of the Tory Party could replace them. They did put money into infrastructure, in part that was facilitated by the turn in the global
long wave cycle, after 1999, which saw economic growth itself rise, creating resources for such spending, but as stated earlier, it was also based upon this same delusion shared with the reactionaries of the Tory Party, that value is created by capital, and that the mirage of additional wealth created by inflating asset price bubbles, could be used as collateral to borrow against to finance both consumption and investment. One of the symbols of it, was New Labour's use of
PFI (borrowing) as against taxation, to finance its large scale infrastructure spending.
As, the new long wave upswing got underway, and Labour also began to spend on the NHS, education and so on, it faced labour shortages. But, its support for the EU, fitted well to such conditions, as it did the obvious thing, and simply filled those vacancies with EU workers, from countries where they were in surplus, and where wages and conditions were not so good. The reactionaries, of course, portray this as a bad thing, and an argument in favour of Brexit. The reactionaries of the Tory Party, today, even as they are also forced to try to get EU workers to come here, to fill the vacancies for lorry drivers, to avoid a crisis at Christmas, argue that, and say that their policy is instead to have better paid, and trained British lorry drivers.
It is, of course, nonsense. There have been times when Tories argued for better wages and conditions for workers, but it was always on the basis of a lie, and for purely opportunistic reasons. For example, when the Tories lost the battle over the
repeal of the Corn Laws, the 19th century equivalent of Brexit, the Tories, representing the interests of the landlords, pushed through the
Ten Hours Act, in parliament, limiting the maximum hours that workers could work, to ten per day. It was an act of political revenge against the Liberals who represented the interests of the
industrial capitalists. But, as Marx points out, it was wholly hypocritical. The wages and conditions of the agricultural labourers, employed by those same Tory landlords, was even worse than those of the industrial workers, whose plight the Tories now sought to enlist in their cause.
But, in the last 50 years, in particular, the Tories have been on the side of reducing workers' wages and conditions at every stage, the most obvious example being the year long Miners Strike of 1984-5. They have repeatedly hemmed in workers ability to resist attacks on their wages and conditions with anti-union laws, and so on; they opposed even the minimal reforms that New Labour introduced, such as the Minimum Wage. The Tories have not opposed the EU and free movement of labour, because of any genuine concern on their part about the wages and conditions of British workers – they have already worsened the conditions of British lorry drivers by increasing the maximum number of hours they can drive in a stint to ten, and, by reducing some of the requirements for new drivers, they are not only undermining those drivers, but putting everyone on the roads at risk!
Yet, New Labour created the conditions for the Tories to step into that breach. When New Labour saw the problem it faced, in the early 2000's, with a labour shortage, it too did see immigration of cheap labour as its salvation, just as, faced with a labour shortage in the 1950's, the UK government encouraged immigration from the Caribbean and elsewhere. It didn't argue, as a socialist would, that, whilst this immigration is a good thing, and enables an immediate labour shortage to be resolved, it should not be a means of reducing wages and conditions, and that the immigrant labour should have the same wages and conditions as the UK workers, should be fully integrated into the labour movement and so on. Instead, New Labour saw it simply as a means of providing a cheap solution to an immediate problem of capital.
It also, thereby, failed to take up any of the economic and political arguments of the reactionaries, against the EU itself. Instead, it relied, bureaucratically, on the fact that a majority of MP's, including Tory MP's, were supporters of the EU. They thought they did not have to make those arguments, and indeed, the arguments they could or would make in favour of the EU, were not ones that were that enamouring for workers, as they were based upon the interests of capital not labour. That was what happened when that was put to the test in 2016. But, the vast majority of workers, and so Labour's core vote, backed Remain, because they could see that, despite the poor arguments put by both Cameron and Labour in favour, the arguments of the Brexiters were much worse. Rather as Marx put it, in the Communist Manifesto,
“The aristocracy, in order to rally the people to them, waved the proletarian alms-bag in front for a banner. But the people, so often as it joined them, saw on their hindquarters the old feudal coats of arms, and deserted with loud and irreverent laughter.”
However, from the 1980's onwards, as Thatcher's policies led to de-industrialisation, large numbers of industrial workers, particularly in the old industrial centres, and urban towns of the Midlands and North, lost their jobs. The policies of New Labour did nothing for them, as the towns decayed. Millions went into retirement having never again obtained a permanent job, millions more became the new petty-bourgeois base of the Tory Party that had created those conditions. Unable to get permanent employment, they became self-employed and small business people. They became the equivalent of the independent producers that Marx describes, whose interests were represented by the reactionary socialist ideas of
Sismondi, or that Lenin describes in Russia, in the 1890's, that were the basis of the reactionary populist ideas of the
Narodniks.
The self-employed, small business owner is led to develop individualist ideas. Without the advantages of a large capital, they see themselves as needing to survive on the basis of guile. They are often even less affluent than workers in full-time employment, which builds up a resentment of such workers, and particularly of their trades unions. They see their own means of production as capital, and like all owners of capital, they are more likely to see the future in terms of turning it into a bigger capital, rather than – what is far more likely – that they will again find themselves going bust, and drawn back into the realm of wage labour. With their individualist mentality, they see the only thing holding them back being an over-bearing state, and its regulations, particularly in the shape of the EU, as a foreign state. This section of society – around 5 million small businesses in Britain, and so around 15 million people – is the bedrock of the Tory Party, and of the core reactionary vote for Brexit, and for Boris Johnson. To have defeated it, in 2016, as I wrote at the time, it would have required that the working-class itself be mobilised and enthused with a positive EU message. David Cameron was not going to do that, but nor was the Blairite Alan Johnson, who Corbyn put in charge of organising Labour's referendum campaign! Consequently, the reactionaries were able to win the day, and we have paid the price for it ever since, as is now being shown by the multiple crises that are now facing the country.
The Tory argument against free movement is idiotic. They say that they do not want to resolve current labour shortages by allowing available EU workers to fill the vacancies. But, that is like saying that there is a shortage of some particular workers in Manchester, but its necessary to wait until you train up workers from Manchester to do those jobs, rather than recruiting available trained workers from Bolton to do them! Economies and markets simply do not work on that basis, particularly in what is now a global economy with an international division of labour. To put it another way, take a
commodity other than
labour-power, say bananas, people in Britain want to consume bananas, would we say, rather than importing bananas from places where they grow easily, we should, instead, grow British bananas, which would require building huge heated facilities, so that the cost of such British bananas would be several times that of the bananas we simply import?
And, this illustrates a further idiocy and irrelevance in the Tory argument and solutions. They argue that they want to train British workers, and have them paid higher wages, rather than bring in EU workers. But, if the wages of lorry drivers rise, because there is a massive shortage of supply in relation to demand, what is the actual consequence? Across the globe, we are currently seeing rising prices of a range of products, partly caused by lockouts of workers in response to COVID paranoia, partly due to the huge amount of liquidity put into circulation by central banks, which is now pushing up prices, as it flows into monetary demand. Take the shortage of computer chips, it means that car producers have had to cut back their own production, or take the rise in iron ore and copper prices, some producers found that they could not pass on these higher prices in their own end products, because the higher prices led to demand falling sharply, at least in the short-term.
Marx demonstrated that a rise in wages does not cause inflation, because it does not change the value of the commodity, and merely implies a reduction in profits. But, in economies where central banks can simply create inflation by printing excess money tokens, a rise in wages that then threatens to squeeze profits, results in central banks printing additional money tokens, so that companies can increase their prices to prevent that squeeze on profits, and that then leads to an inflationary spiral, as prices rise, and then workers seek to raise their wages, which then squeezes profits, leading central banks to print more money tokens, and so on. A rise in wages for lorry drivers will immediately pass on in to the prices of all the goods transported across the economy. And, that comes at a time when the prices of everything in the economy is rising, again both because of that inflationary money printing, and because of the artificial shortages created by Brexit and by lock downs.
The truth is that workers living standards have never risen as a consequence merely of higher wages, which are largely ephemeral and illusory. Workers' living standards have always risen because of increased productivity, which reduces the value of the goods and services that workers consume. The policies being proposed by both the reactionaries of the Tory Party, and the conservatives of the Labour Party are both inadequate and irrelevant in that regard because they fail to address that fundamental issue, and instead remain at the superficial level of money wages.
The Tories have been forced to accept the reality of their Brexit catastrophe, and just hours after saying they would not seek EU workers to fill the gap, have now said they will. But, asked the question, both Tories and Labour spokespeople have responded as though it is simply a question of what they and Britain wants, and that these EU workers themselves have no say in the matter. What is being proposed is merely a short-term VISA relaxation, but that means that those workers will have little in the way of protections or advantages, and when they are done with would be disposed of. Given that lorry drivers pay and conditions is better inside the EU than in Britain, why would more than a handful be attracted to come to Britain, on that basis, to help deal with a self-inflicted wound caused by Brexit? And the same applies in relation to care workers, hospitality and so on.
Of course, Starmer can say nothing positive on any of this, because he has attached himself to the same reactionary star as Johnson, in relation to Brexit itself. Even getting any kind of straight answer from Starmer's mouth is worse than pulling teeth. Ask him what he thinks of today's weather, and he will respond by attacking what the Tories have to say about it. He cannot say anything original or positive, because he fears that whatever he says might offend someone, and lose him votes. Such is the consequence of a politics based upon simply collecting votes, based upon the findings of focus groups, rather than a politics based upon trying to change society based upon the advocacy of genuinely held ideas and principles, and by winning voters to those ideas on the basis of reasoned argument and practical struggle.
The ideas put forward by Starmer and the conservatives of Labour are, like those of the Tories, inadequate and irrelevant, but in different ways. Starmer's 11,000 word tract for the Fabians is a symbol of it. That he should publish it as a Fabian pamphlet is perhaps apt, but, at least the Fabians believed in forward movement if only at a snail's pace. Starmer's policies don't even amount to that, but represent a move backwards, not just in relation to Corbyn's Labour, but in relation to Wilson's Labour of the 1970's.
Much ado was made of the policy announcements of Rayner, but they are pathetically minimal and irrelevant. If this were 1921, not 2021, then some of the proposals on worker' rights might have seemed adequate. Even, back then, however, workers were getting paid holidays, sick leave and so on. Saying that a Labour government would provide such basic things in 2021, is an indication of just how far Labour has gone backwards. What the proposals on rights actually demonstrate is precisely the extent to which workers remain a slave class, deprived of control even over the means of production, which are now their collective social property, in the form of
socialised capital, but also the extent to which Labour is content to leave workers in that condition as wage slaves, and only to promise mild palliatives to its condition.
The problems of lack of training and education are a consequence of the policies of both Labour and Tories over the last 40 years, which encouraged the view that wealth is increased via capital gains, not by the new value created by labour. The same caused the lack of investment in infrastructure, and in real capital investment in production. Profits have been used for such gambling instead of the accumulation of capital, in search of the interests of shareholders rather than companies, or their workers. That has been possible because, the collective property of the workers, in the shape of socialised capital, is controlled by people who do not own that capital, but who merely loaned money to the company in return for shares. The whole point of a loan, whatever form it takes, is that possession of the money is given up, in exchange for a payment of interest/dividend. And, as possession is given up in exchange for such payment, so control over it is also given up. Yet, shareholders not only get paid for the money they have loaned, but current law allows them to also exercise control over what they have supposedly given up!
The shareholders, and not the company, i.e. its workers and managers, are the ones who get to vote, and who appoint the top Directors. So, its not surprising that they use the company's capital in ways that benefit those shareholders and executives, not the company itself. Both Tories and Labour are committed to a continuation of that obscene condition. Not only that, but whenever the consequences of that results in the blowing up of asset price bubbles that inevitably crash, the state is also committed to blowing those bubbles right back up again, to protect the interests of those shareholders. In the last 25 years, it has also shown that it is prepared to destroy the real economy, via policies of austerity, to hold back economic growth, and hold down interest rates, in order to do that. Again both the reactionaries of the Tory Party, and the conservatives of the Labour Party are committed to continuing that condition. From the perspective of the interests of the working-class that is idiotic, but from the perspective of the interests of the owners of fictitious capital, it is entirely rational, and it is those interests that both the Tories and the conservative social-democrats serve, not the interests of workers, who make up the clear majority of society.
And, of course, its because of that that the other idiocy of this week, that, at a time of these multiple crises, Starmer chose to launch yet another attack on the members of the LP, and, thereby on the Left, by insisting on reducing the democracy in the party, and enshrining the power of the tiny elite within the PLP, makes perfect sense, because Starmer and the conservatives of Labour are forced to do all in their power, to remove any possible criticism of their politics, any possible alternative solutions that might adequately address the interests of workers, rather than those of the owners of fictitious-capital.
