the capitalist state and the debate over cuts

by David Broder

The Labour Party’s pre-election budget has focussed attention on ‘the recovery’. In his speech to the House of Commons last Wednesday Chancellor Alistair Darling outlined a plan of government action to restore economic growth and reduce the British state’s borrowing.

The Tories and Liberal Democrats have somewhat different plans to Labour about the best means of achieving these objectives. However, what is rarely challenged, or even discussed, is the underlying consensus which structures the whole debate: the very idea of ‘the economy’ and a collective national interest. So how should communists relate to this debate?

In response to the crisis in the capitalist economy, much of the left raised slogans blaming ‘bankers’ for the financial collapse and asserting ‘we won’t pay for their crisis’ as the Labour government moved to bail-out the banks. At the same time they pointed to the hypocrisy of free-market advocates now asking for hand-outs from the British state, and demanded more widespread nationalisations to shield the working class from the damage caused by the crisis.

This was a non-sensical reaction. The understanding that the state wanted to divert spending to protect British finance because it is a guarantor of the interests of the ruling class is in utter contradiction to the argument that the state is the instrument of progressive social change and should intervene further.

The state is not a politically neutral body run by whichever party has the most popular policies. Nor is it simply an “armed body of men”, a repressive apparatus. Rather, it is a cartel, the ‘executive committee of the ruling class’, a vast array of institutions whose overriding purpose is to maximise the long-term success of British capital. As Rob Kirby has explained, it must furthermore “supply those services necessary to the reproduction of society as a whole that no individual capitalist can make a profit from doing; building roads to transport goods, healthcare to maintain the working class, and police to maintain social order. This state spending, whilst needed by capital in general, becomes an increasingly heavy drag on the profits of individual capitalists. Whilst this is a bearable burden during the good times, during a recession, when capitalists can’t produce sufficient surplus value to turn a profit, this becomes a crippling and potentially bankrupting outgoing.”

The low level of class struggle today means that ‘big politics’ are off the mainstream agenda and the differences between the parties’ economic plans are very marginal: both are for a 50% tax on those who earn £150,000 a year, both agree on an increase in capital gains tax, whereas the Tories propose an increase in National Insurance 1% less than Labour’s plans. The Tories opposed the bail-out of Northern Rock in autumn 2007, but it is implausible that in government they would have allowed the major banks to collapse the following autumn, given that all G20 economies, ruled by ‘left’ or right, supported the bailout plans.

The speed of cuts is a far more important issue for the interests of British capitalism. Today the threat in the minds of the ruling class comes both from mass resistance to these cuts and furthermore the risk that slashing state spending will jeopardise confidence in the markets and lending to business. Even today the establishment is not straightforwardly pro-Conservative or in favour of the sharpest possible cuts – George Osborne, Tory contender for Chancellor, has had a far from easy ride in the press. The Tories may, historically, have been the major party of British capital, but at times the ruling class have also preferred Labour to qualm social tensions (1945, 1974) or when the Tories have been straightforwardly incompetent (1997).

But that whole debate is within the terms of what is best for ‘the economy’ – which means, British capitalism. It is hardly credible that the party leaders themselves subjectively think ‘this is a great opportunity to really hammer the poor’: rather, they identify the national economy with the collective interest and thus want to defend Britain’s pre-eminent economic position, including in particular its AAA credit rating. The parties have similar plans because there are few alternative means of doing that. As has been well-publicised, Alistair Darling pressured Gordon Brown not to adopt a ‘cuts vs. investment’ election theme, since this would ensure Labour were sunk as the ruling class would not think them credible.

Moreover, not only does the media push voters one way or the other, but many people who identify their own interests with those of ‘the economy’ in general will cast their vote accordingly. Capitalism forces people to sell their capacity to work in order to survive, and thus many will identify their own interests with those of capitalism: the need to ‘protect the recovery’ and so ‘create jobs’ appears to be of material benefit to the working class. In reality, not bailing out the banks would have sunk the British economy and seen the British state go bankrupt and made the cuts even more ‘necessary’.

Within the framework of capitalism this is indeed true because capital is a totalising social system, not just a collection of bosses and rich people. The laws of the system are self-fulfilling: ‘the bankers were wrong, yes, but not supporting the banks would have destroyed the whole economy’; ‘the US invasion was wrong, yes, and may have encouraged the growth of Islamist militias in Iraq, but the troops mustn’t leave because then the Islamists would take over’… This is evidently hypocritical and presents us with only unpalatable choices, unless we stop this vicious circle altogether by abolishing entirely the social relations which create it.  Advocating a communist alternative is in this sense much more ‘realistic’ than looking for a nicer form of capitalism.

Those on the left who argue that the cuts are ‘unnecessary’ from the point of view of the state, and of ‘the economy’, are therefore clearly wrong. The problem is that they take as their starting point what is possible within the structures of capitalism rather than what is desirable or necessary for human beings. Socialist Worker opposed the bail-out of the banks, arguing the money should be invested in public services instead, but now argues ‘there’s no need for cuts – the money’s there‘. This is a utopian defence of social democracy, with no grounding in reality, much as with the claim that British Airways is in fact profitable.  This way of thinking seeks to blame individual bankers and bosses for being bastards, ‘greedy’ or ‘irresponsible’ rather than showing the unviability of capitalism as such.

We should not fight the cuts on the understanding that the capitalist state ‘really’ can afford high quality public services for all, or with the argument that living standards could be raised by a ‘real’ Labour government with suitably progressive policies. Suggesting to the ruling class another way of exiting the crisis is a dead end: we want to overthrow the capitalist social relations which make the cuts ‘necessary’, not to sustain illusions that capitalism could be run in our interests.