Hillel Ticktin lambasts the shadow chancellor’s economic timidity
Clearly, with the election of Donald Trump, the bourgeoisie is entering a period of difficulty - as is to be expected at this stage of the decline and decay of capitalism.
However, the Corbyn wing of the Labour Party is putting forward a very weak economic programme. It is, of course, difficult for shadow chancellor John McDonnell to openly propose what he has held in the past (and may continue to hold till the grave), because he believes it to be unacceptable - the Labour right is in fact attacking him as a fantasist.
McDonnell’s programme begins, as does Trump’s, with investment in infrastructure - something like £500 billion. £250 billion would be invested directly, and £150 billion would be spent through a nationalised bank, plus £100 billion to be raised from taxing the capitalist class. To give you some idea of what £500 billion means, it is close to the total spent in the government budget every year. Trump, of course, is putting forward a figure of $600 billion, but in the context of the United States this figure is trivial. The GDP is $16-18 trillion a year; while the official arms budget alone is $700 billion.
At the present time the bourgeoisie has realised that the policy of austerity cannot continue as it is. It has been the policy since the downturn and has been enforced worldwide, whether the government imposing it is conservative or ‘socialist’. That is obviously true in France, Britain and Germany, and effectively it has been the same thing in the third world, with certain exceptions.
So a switch to infrastructure represents a change - and, of course, Trump presents it as a very big change. It is not new, however: it was in a sense Barack Obama’s policy, but he could not get it through congress, and it has been the policy of the International Monetary Fund for the last few years. Since the IMF is an institution largely controlled by the US, this is not so surprising. The IMF has been insisting on the importance of infrastructure, which should be built up in all countries. You do not need to be familiar with Keynesian economics to know that if you expand your budget and invest in the economy then you will have growth and increase the number of people employed. The result being that the tax take will grow - and it can grow very considerably. That is elementary logic - you do not need to know anything about economics to understand it.
But economics has become a huge industry in itself. Lawrence Summers, who was Bill Clinton’s treasury minister in the 1990s and is now professor of economics at Harvard, keeps writing in the Financial Times along the lines of what I have just said: there is no reason not to spend on infrastructure, since it would not cost the bourgeoisie a single penny. Employment and the tax take would rise, and consequently there would be no increase in the budget deficit, so technically it could have been done a long time ago.
But, of course, it was not really about a budget deficit at all. The reason they did not adopt such a policy was because they preferred austerity - they actually wanted large-scale unemployment. They wanted a reserve army of labour, which would hit the working class hard, in order to control it. They wanted to re-establish commodity fetishism - the eternal, permanent nature of the market. They wanted to re-establish the ideology. That was the intention. But could such a policy succeed? One could argue - and this obviously is what a section of the capitalist class, and whoever advises May, must think - that it just does not work. The working class voted for Brexit because it was antagonistic to the establishment, in the words of Nigel Farage. If that is so, clearly austerity is not actually working, or working sufficiently. That is what this government believes and what the far right has been arguing in its own, anti-establishment language - it is what Trump is arguing.
In fact McDonnell is actually far less radical than Trump in terms of what he is proposing. And in the context of the new May government he is not that radical either. The fact that rightwing Labour says it is a fantasy shows the nature of rightwing Labour - it does not understand the system it is supporting. So there is no reason for McDonnell to back down - indeed he could go very much further. But he has not put it in this overall context. So, while Jeremy Corbyn and John McDonnell both talk about socialism, they are not even very radical, let alone socialist.
Indeed they both talked of socialism at the Labour Party conference in October. But it was simply amazing - deputy leader Tom Watson came out with a speech about the wonders of capitalism and afterwards was congratulated by Corbyn! This must be a new type of socialism. In a recent TV interview Corbyn was asked if he was in favour of a socialist, planned society. And he said no: that went out with the Soviet Union, and Labour was in favour of the market. So what on earth is he talking about? On the one hand he talks about socialism, and on the other hand the market. Obviously McDonnell is anxious to distance himself from Stalin’s regime, but he is not prepared to explain the difference between that and what a socialist society would be like.
The case for a socialist society starts with the abolition of abstract labour. Obviously Corbyn and McDonnell are not going to use those words, but what it amounts to is abolishing the measurement of, and control over, labour. A society where such control exists is a society marked by an economic force which socialism aims to abolish. You might put forward a demand like, ‘There should be control from below, and managers should receive the same wages as ordinary workers.’ If McDonnell did that he would be laughed at, of course. But it would be a necessary feature of socialism, which entails self-management throughout society, from top to bottom, and movement between positions, whereby people are trained to take part in the planning and management apparatus, as monotonous, soul-destroying jobs are abolished. This is not just an ultimate aim: it is one which needs to be brought into being.
Quite obviously McDonnell does not go near it. Yes, he says he will tax wealth, but it is not very clear to me why he does not propose a very heavy tax on incomes. Why should anybody get £5.5 million, the average salary of a CEO today? I looked at the income tax statistics for 2010, and what they show is that there were around 11,500 people who ‘earned’ more than £1 million a year, the average among them being £2.5 million. Since then, the average has gone up to £5.5 million - their salaries have more than doubled. If you multiply 11,500 by £5 million, you get close to £60 billion and the budget deficit is £70 billion!
So McDonnell could produce these statistics to really back up his claims for ‘higher levels of equality’. Of course, the reply would be: ‘There’d be no incentive for the wealth-creators, the entrepreneurs, those who come up with the ideas.’ One could argue in reply that such capitalists are actually a hindrance, but if he did that he would be viciously attacked and derided as an idiot.
So instead he proposes a fairly anodyne wealth tax, which is opposed using the argument that old people - usually women - who have big houses should not be penalised in that way. Along with this he has put forward a £10-an-hour minimum wage. I do not understand why he is being so miserly - the government itself is proposing £9 and there is still inflation. McDonnell clearly wants to be seen as a ‘moderate’ leftwing shadow chancellor, whom the newspapers will take seriously. But the result is just incoherent and stupid.
Even on the obvious question of the full nature of austerity, why he does not commit to restoring all benefits I do not know. The argument in 2010 was that Britain had to go for austerity because it would go bankrupt otherwise, and there were comparisons with Spain and Greece. But Britain is not actually in the same position, even though it has a huge budget deficit. In the case of Greece and Spain, the largest percentage of the deficit is owed to external lenders; in Britain two-thirds is owed internally, to various pension funds and so on. The fear was that investment in Britain would cease, but that has not happened, and was not likely to happen. There was no reason to assume that pension funds or asset management funds would go under and that is even more true today.
It is hard to see how McDonnell’s programme gets anywhere near appealing to the majority of the population. He does say that Labour would repeal the anti-trade union laws passed by Tories, but he does not go beyond that. The laws were not exactly pro-union before that. It really is a case of ‘extreme moderation’.
There is the usual statement about corporate greed and the need to deal with tax avoidance and evasion. Personally, I do not think socialists should bother with that. It is absurd. What you need to do is raise taxes, full stop. If a corporation refuses to pay tax, then you deal with it. Tax avoidance is deliberately built into the budget statement: it is 100% legal. You cannot argue against it except by arguing against the whole budget and the philosophy behind it - which is what McDonnell should do. But to talk about cracking down on tax avoidance … well you can’t: a considerable percentage of the population takes part in it. ISAs (individual savings accounts) are legal tax avoidance, built into every budget, so talk of cracking down on it is extreme reformism, of an absurd kind. If you are going to propose a budget at all, then you need very high levels of taxation on the rich. If someone has a £5.5 million salary, charge them £5.4 million in tax: if they refuse to pay it, put them in jail!
It is the same with tax havens, even though Britain itself is one of the top tax havens in the world anyway. And it is not that the Channel Islands, Bahamas, etc simply act on their own: tax havens are part of the capitalist system as a whole. The idea that an isolated Labour government can do anything about it on its own is a fantasy, but there is no attempt to look for an international response: it is just Britain and its ‘tax problems’.
However, McDonnell has never held a revolutionary position, although it is understandable that the bourgeoisie attacks him so viciously (and, in its own stupidity, the Labour right has turned Corbyn into a hero). But what they are proposing has very little to do with socialism - except in one important sense. We are living in a period of crisis for capitalism, which is why the bourgeoisie has reacted to Corbyn in the way it has. It really does not have a way out. So, even though McDonnell is a confused reformist who is not going very far, people may force him, in spite of himself, to go further. He has obviously decided to try and conciliate the people attacking him, but in time he will discover that will not work, unless he capitulates completely.
His first demand should have been for full employment; after all, the recent results of votes in the US and Britain precisely reflect current high levels of unemployment. He ought also to have made a statement on pensions, which for most people are appalling at around £8,000 a year. But some in the Labour Party seem to go along with the idea that the cost of pensions is getting too much. The Labour MP, Frank Field, has expressed this view and was not repudiated. Nor has McDonnell proposed anything near enough regarding the national health service, which is clearly cracking today.
And in terms of the overall system, he should have stood up and said, ‘We don’t believe in competition. Competition is not part of socialism. On the contrary, we stand for equality, including equality of power. We stand for people working because they want to work, because work has become humanity’s prime want.’ But he did not do so; he is clearly prepared to accept the overall capitalist philosophy.
Although Corbyn and McDonnell at various times have talked about control from below, now there is no mention of what some people call economic democracy. Nor, what is crucial, did he attempt to take on Tom Watson’s line, which is basically that capitalism is highly efficient, more so than any other system. He ought to have explained that only socialism is efficient, and then given examples of how inefficient capitalism is. The meaning of the socialisation of production - that he does not touch upon. Socialism is a very different system which is bound to come about, which is in the process of coming about.
Both The Economist and the Financial Times have recently made the point that today we have a level of monopoly higher than it has ever been, even though bourgeois economics disputes this. Today, according to The Economist, there are three finance-capital firms, which control 40% of the stock exchange - and that 40% accounts for 80% of output. So there are three firms effectively in control - I do not think such a situation has ever existed before. One would not expect the Labour leaders to really understand what that means, but one would expect, perhaps, that their economists will eventually catch up with reality.
Capitalism is going the way Hilferding and Lenin predicted, even if some on the left say they were wrong. That is the way it is, and yet McDonnell seems to be in some other space.