Cooking the Books 2
All state activists now?
On the eve of Britain’s final departure from the EU, Boris Johnson wrote an article in the Daily Telegraph in which he praised the development of the Oxford University/AstraZeneca vaccine as an example of collaboration between ‘state activism’ and ‘free market capitalism’. The government, he said, had provided the cash and the scientists while AstraZeneca provided the production facilities and the marketing. This was interpreted as a hint of the economic policy he envisaged his government pursuing.
This praise of ‘state activism’ does seem strange coming from a Tory prime minister as it has traditionally been more associated with the Labour Party. In fact, combining ‘state activism’ with ‘free market capitalism’ has been the economic policy of the Labour Party since it abandoned ‘nationalisation’ – the state owning and running industries – as its panacea. Since then its policy has been that the main means of production should remain in the hands of profit-seeking private enterprises, so with profit as the motivating force of productive activity and ‘state activism’ taking place in this context.
When Labour could still be considered a classic social-democratic reformist party, it envisaged the state being active within capitalism to improve the standard of living of workers through social reforms that brought them some direct material benefit. Nowadays, the Labour Party envisages the state being active to provide cash for infrastructure projects to be carried out by private enterprises and for improving productivity through training schemes.
This was the case even during the Corbyn interregnum. Corbyn himself didn’t seem much interested in economic policy. This was left to the shadow Chancellor of the Exchequer, John McDonnell, who set out to develop an economic policy that Big Business and the City could accept as credible and reasonable.
To this end, he invited the economist Marianna Mazzucato, author of The Entrepreneurial State: Debunking the Public vs. Private Sector Myths, to be one of the Labour Party’s advisers on economic policy. According to publicity for her book, she argued that ‘in the history of modern capitalism the State has not only fixed market failures, but has also actively shaped and created markets’.
This is historically and empirically correct. States can and have done this but the markets they create are not extra markets. They are created by taking money from sections of the capitalist class (whether through taxes, borrowing or inflation) and giving it to other sections to carry out projects that a state has judged are in the general interest of the capitalist class as a whole.
McDonnell made this Labour Party policy, telling the 2015 Labour Party conference:
‘We will create what Marianna Mazzucato describes as the entrepreneurial state. A strategic state that works in partnership with businesses, enterprises and workers to stimulate growth.’
The state itself would not organise production, but only ‘stimulate’ private enterprises to do this by putting up the money for them to make profits from activity it wanted to encourage. Or, as Johnson put it, a collaboration between ‘state activism’ and ‘free enterprise capitalism’.
In embracing this, he has stolen the Labour Party’s clothes. It may just be rhetoric designed to retain the support of ex-Labour voters in the Red Wall constituencies in the North that helped the Tories win power in the 2019 general election. It won’t be popular with the hard-line free-marketeers on the ‘libertarian’ wing of the Tory party who deny that the market can ever misallocate resources.