1980s >> 1987 >> no-996-august-1987

Economics Exposed: Same old economic story

On 22 March of this year, the Sunday Telegraph openly mourned the passing of the Labour Party as a viable “opposition’’ within British capitalism. In fact, leading politicians of both the Labour and the Conservative Party have long realised this common ground of taking it in turns to run the profit system, despite their public posturings and pantomimes. A glance at some of the economic policies with which the Labour Party tried in vain to woo the electorate in the recent general election will show just how similar these parties are in this area.

By the time of the campaign itself, the more daring claims of earlier years had been modified into the promise to reduce unemployment by at least 1,115,000 in two years at an annual cost of £5.9 billion, two thirds of which would be raised through taxation. Leaving aside for a moment the impracticality of the scheme, the brochure, New Jobs For Britain, is riddled with hypocrisy. Half of the jobs which would supposedly be created would be in the private sector. 160,000 of the suggested reduction in unemployment would, it turns out, have been by means of encouraging men over 60 to take early retirement. And despite all of the justified complaints, many from the Labour Party itself, about YTS and other present schemes not involving “real jobs”, a further 360,000 of the claimed reduction would be through a “national training programme” creating “jobs and training places”. Also, a further 30,000 16-year-olds would be persuaded to stay on at school, requiring a further 30,000 trainers in addition.

Quite apart from the hypocrisy involved here, though, and quite apart from the fact that all this would still leave over two million unemployed, these plans overlooked one key problem. Jobs exist within capitalism if and when capital is invested with a likely prospect of realising a profit. The financing of schemes through taxation involves reducing capital available for investment in the private sector (where Labour had hoped to “create” about half a million jobs), and transferring these resources into the hands of the bureaucracy which controls the state sector. The net total of capital available for investment would remain about the same, as would the prevailing market conditions which have been prohibiting investment in general. By taking some capital from private hands and “forcing” it into investment in this way, there may be a slight reduction in unemployment in the short term. But, as was seen in France a few years ago, this would very rapidly dissolve into continued mass unemployment, as the capitalist slump reasserts itself with renewed vigour.

During the election campaign, the Labour Party made some play of the claim that this latest blueprint did not depend on the more narrowly Keynesian concepts of trying to “create” credit or print money, as it had been widely recognised that this simply reduces the value of money rather than increasing the levels of wealth generated. But the alternative source of funding, that of taxation, again merely reallocates resources and is also powerless to control the inevitable capitalist trade cycle of slump and boom.

The real problem, of course, is that throughout the world market system production is geared to the profit-needs of a minority, as expressed through the fluctuations of the market. The socialist alternative, of meeting needs directly through a system of production for use, is scoffed at as loudly by Labour as by the Tories (the only difference being that the Tories” arrogance has again been allowed to wallow in power for the time being, whilst the Labour Party’s dismissal of socialism has not even won them that dubious reward). In The Alternative Economic Strategy it is stated that: “Production only creates jobs if the products can be sold. Production for use is nothing more than a romantic fantasy unless there is some way of transforming social needs into effective demand”. For “alternative”, then, read “same, old”. It is Labour’s obsession with sticking to the needs of the money system (which they cannot even get their eager hands on) which is the real romantic fantasy. Next month, we shall start to deal with outlining the ways in which socialism will be able to organise the production of wealth in the interests of humanity as a whole.

Clifford Slapper