Hoping against hope
‘Hope is a bad thing,’ said Henry Miller, ’It means that you entertain illusions.’
That hope is illusory is an eternal concept. In the ancient Greek myth of Pandora, her box was filled with all the evils that beset humanity and right at the very bottom was, hope.
Fast forward a few thousand years to a Labour Party conference and there is the leader, and Prime Minister, having rummaged around in Pandora’s Box, standing before the assembled delegates brandishing Hope for their inspiration. Andy Burnham declared that by dint of his honesty, hope will emerge to unite the British people behind him and his schemes to rejuvenate the nation. ‘My plan for Britain is our chance to believe again.’ ‘Britain can hope again’ was his headline for the brief summary of his proposals published to rouse support. ‘My plan for Britain starts today. I’m asking you to stand with me.’ The plan does indeed have attractive features, especially for the multitudes struggling to cope with ever increasing bills and decreasing real incomes.
The very next day after Burnham’s address to his party, and hence the nation, a 6am news broadcast carried a headline item about energy price rises coming January 2027 in the teens of percent, with the prospect of more later next year. This announcement of not such a happy new year in prospect followed hard on the heels of Burnham’s first economic pronouncement in his summary. ‘We’re going to start with the essentials in life. Housing, water and energy will be brought back under more public control so we can make them affordable again.’
Quite apposite it might appear. Yet this statement not so much begs as pleads a number of questions. How will the public, the many millions, actually exert their control? There is no direct way they can decisively influence what will inevitably be a state body set up as a substitute for the boards of directors. Even if this state body could be more beneficent, is it going to be in place by January of next year, just a couple of months away? Also, is it going to have access to sources of energy free of the international travails presently forcing up prices?
No energy will be available unless it is profitable. The whole worldwide economic system is presently capitalist, meaning production is driven by profit and will remain so even if the state becomes the de facto capitalist.
Then there’s the question of compensation. It may be that those on, or to, the left of the Labour Party will resurrect their venerable slogan, ‘nationalisation without compensation’. Sounds good, even plausible, until it gets into the courtroom. Not only does the state serve the interests of capitalism, so does the legal system. It would undoubtedly be found illegal to simply take companies away from present owners. Even if some way of doing this was found there would, most likely, be years of litigious wrangling resulting in huge legal costs consumers would ultimately pay.
The same principle applies to Burnham’s other two essentials, housing and water.
No matter the deficiencies identified in the housing market, it is an error to suppose those deficiencies will drive house building. Houses are not built primarily to provide people with somewhere to live; that is their purpose, their use value. However, the spur to building is the exchange value of the house, essentially the price it can be sold for and thus realise a profit.
Profit is the driver of house building not the need for homes, which is why it’s known as a housing market. This is why there has been a tendency for house construction firms to build 4 and 5 bedroom detached ‘executive’ houses.
A four-bedroom house does not cost twice as much to build as a two-bed, making the smaller house relatively more expensive to build and, therefore, buy. Government can intervene and require builders to erect smaller houses, but they will not be sold at cost. They will still have to yield a significant profit. If land is identified as suitable for building, construction companies will buy it then not build on it unless and until any subsequent housing is deemed profitable. It doesn’t matter if there is a huge need for housing in the area.
Government, national or local, could initiate the building of council/social housing for rent. While this would obviate the need for buying, with its requirements for large deposits and mortgages, rents would have to repay the initial financing, indirectly paying interest on money borrowed for the purpose as well as the original capital. And rent is not a fixed term like a mortgage, but must be paid over the lifetime of the tenant or tenants. Rents may or may not be lower than mortgage repayments. It could be that those identified as having special or exceptional needs will be exempted from, or pay reduced, rents. This would not remove the value of those rents from the financial equation, but might have to be spread over actual rent payers, council tax, or both. Such provision would be very limited, otherwise the cost would become unsustainable.
There is absolutely no hope of freely meeting everyone’s housing need while capitalism’s financial market and the construction industry continue to be driven, as they must be, by the overriding imperative to realise profit.
The same applies to Burnham’s third essential, water. Rain may fall for free, but by the time it flows from a tap it has been collected, stored and treated in various ways. Then, when it has been used it has to be drained away and treated again. Each one of these processes adds a cost, as does the expense of maintaining and replacing supply and drainage systems. Why would companies bother to do all this in the first place unless there was a prospect of profit?
Railways provide an exemplar of what happens when sufficient profits are not accrued. The companies surrender their franchises for the government to take back responsibility for loss-making. Then the state must find ways of providing the services. If that means those services continue loss-making then they will have to be subsidised. As governments correctly claim, they don’t automatically have money, they have to raise it through taxation or borrow it on financial markets. Either way it’s a drain on the national economy.
Then, along with all other government expenditure, if that drain becomes too large financial markets raise their borrowing rates which adversely affects all sectors of the economy, with rising inflation and unemployment; the threat of recession, a way capitalism can discipline government.
Nationalisation or public/private partnerships are often cited as being socialistic (that is, a little bit socialist). In this way they are sold to the electorate as hope-filled alternatives to capitalism. The reality is they are not, and cannot, be anything of the sort, being as subject to capitalism’s strictures as any wholly private enterprise.
The Prime Minister can preach the gospel of hope and perhaps even convince himself. After all he could not stand up at the Labour Party conference and declare they would build a totally new, worldwide society no longer driven by the profit motive, but centred on freely satisfying everyone’s needs.
He correctly identified three essentials (though failed to mention all the others people require), but however well-intentioned he was being it is not in his power to do more than tinker a little in the hope of some limited short-term improvement. As well as putting crosses on ballot papers come an election voters can cross their fingers and hope. Both will be equally (in)effective in ameliorating the deprivations caused by capitalism.
Better to realise that it is time to move beyond capitalism and actively pursue the socialist alternative, rather than just hope for the best.
D.A..