1980s >> 1980 >> no-916-december-1980

Ronald Reagan Takes the Stage

“A recession is when your neighbour loses his job. A depression is when you lose your job. A recovery is when Jimmy Carter loses his.” Such was the favourite slogan of Ronald Reagan, the former film actor (“star” would be an exaggeration), in a campaign which has just seen him elected President of the United States. The slogan worked, the policies it decorated will not.

It is already a commonplace to observe that Reagan didn’t so much win the election but Carter lost it. The American economy is in deep recession, with productivity and real incomes falling, and inflation and unemployment rising. Lack of profitability has caused many steel plants to close down, and the national unemployment figure of 7.6 per cent of the workforce (which means over eight million people) is doubled in some of the steel-producing areas. Unemployment is far higher, too, among black and teenage workers; and among blacks of between sixteen and nineteen years of age, the unemployment figure is thirty-seven per cent. Less publicised is the fact that just over one American in ten lives below the official poverty line. The parlous economic situation, together with foreign policy disasters such as the failure to secure the release of the hostages in Iran, led to the unpopularity of Jimmy Carter. Carter had entered the White House claiming to be “different”, an upright man who would practise new standards of truth and honesty, but these promises were wrecked in the storms of capitalist crisis. His inability to ride or control these storms was responsible for his ignominious electoral defeat.

This time it was the Republican candidate who presented himself as offering a breath of fresh air. Reagan’s policies included massive tax cuts, supposedly designed to “get government off the backs of the American people”, and stimulate investment and production. There would be reductions in welfare spending but increased expenditure on defence. Employment would be boosted by lowering of the legal minimum wage, on the grounds that the current princely sum of S3.10 an hour prices black youths out of a job (shades of Sir Keith Joseph). A general lessening of state interference would soon set the economy to rights, and a new golden age of freedom and luxury would dawn. Or so the script ran.

However disillusioned American workers were with Carter, they certainly did not flock to Reagan in overwhelming numbers. Fewer than four million more voted for Reagan in 1980 than for Ford in 1976. A high abstention rate has always been an unusual feature of American elections compared with countries such as Britain and West Germany, and this time a new high (or low) was reached, with barely half of those qualified to vote bothering to do so. The “landslide” of support for Reagan in fact works out at little more than a quarter of all Americans of voting age.

The traditional low turnout occurs in spite of (or, arguably, because of) the mammoth sums spent on television advertising by the main parties and other pressure groups. For in American politics, money talks very much louder than ideas and principles. In 1978 the cost of winning a seat in the Senate was a cool million dollars. A noticeable development in this latest election was the massive expenditure by the “New Right”, wealthy religion-motivated groups who campaigned specifically against the re- election to the Senate of so-called “liberal” Democrats (those who supported such subversive reforms as legalisation of abortion). The financial domination of electioneering naturally works against those whose funds are more modest, such as the socialist movement in America. Like a room at the Ritz Hotel, TV time is available for all—provided they can afford it.

Of course all the advertising and all the money in the world may be sufficient to convince the voters, but they are no help when it comes down to the real nitty-gritty, putting the promises into action and curing economic ills. For Reagan’s policies will be as ineffective as Carter’s have been, and will do nothing to improve the lot of the American working class. The call for tax cuts, for instance, may sound as if it will automatically increase the take-home pay of every worker. But this is misleading, as taxes are in fact a charge on the employer rather than on the worker. Workers are paid, in general, the value of their labour power-enough to enable them to maintain themselves and to reproduce the next generation of wage slaves. The difference between the value of their labour power and the value their labour produces— known technically as surplus value —is appropriated by the capitalist class, and it is out of this that taxes are paid. The end of government is to defend the interests of the ruling class, by being responsible for activities such as defence and policing that individual companies are unable to undertake. The capitalists want the benefits of government as cheaply as possible—hence their constant calls for reduced state expenditure. Tax cuts benefit the employers, not the workers.

One supposed effect of transferring money from state to private hands is that it will make more resources available for investment and consumer spending, which will in turn give the economy a boost. But again this view is unfounded. Simply transferring money from one set of hands to another does not increase the total amount in any way; a transfer is just that, a transfer. The same number of dollars are available for spending, no matter who does the spending. By exactly the same token, it follows that the opposite policy—the Keynesian view that it is increased government spending that will get the economy moving again and cut unemployment—is equally fallacious. The true position is that neither increased nor decreased government spending offers a way out of a recession.

The suggestion that a lower minimum wage will enable more workers to find employment may just sound like common sense, but this does not square with the basic economic law of capitalism which says “no profit, no production”. If an employer cannot sell, say, the steel his factory produces, then there is no way he will employ people to make it, however low their wages. So lower wages would not mean lower unemployment.

Thus none of Reagan’s cherished solutions will work, none will operate in the interests of the working class. This should in any case be obvious from a study of American history and a glance across the Atlantic at Britain. For Thatcher’s government is pursuing essentially the same policies as Reagan has in mind: reduced government spending and appeals to the workers to accept lower wages. The world recession has coincided, in both Britain and the United States, with electoral defeats for governments who were identified with the policy of trying to spend their way out of a crisis. In both countries there has been a reaction in favour of policies whereby capitalism is given free rein and market forces supposedly produce equilibrium and full employment. When these new governments fail there will be a swing back to the old, equally futile, interventionist policies.

There is a way off this treadmill, provided the working class see the folly of reforming capitalism. The working-class vote is undervalued by the vast sums spent by capitalist politicians in influencing its use, for it is in fact a priceless weapon in the founding of a moneyless world. Until the vote is used to this effect, the American working class will suffer under the rule of such as the ham actor who, as in his Hollywood days, relies on mouthing other people’s words. The difference is that now he is under the heartless and inhuman direction of capitalist society.

Paul Bennett

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