Cooking the Books: A Classic Reformist

When Jeremy Corbyn appointed John McDonnell as Labour’s Shadow Chancellor the media homed in on McDonnell’s entry in Who’s Who that one of his hobbies was ‘fermenting the overthrow of capitalism.’ Questioned about this by Jon Snow on Channel  4 on 14 September, McDonnell indicated that he didn’t really envisage a literal ‘overthrow’ of capitalism, saying ‘change is a gradual process; that’s what socialism is all about. At the end of the day I do want to transform it.’

Snow followed up by asking ‘is it actually the Shadow Chancellor’s role to try to reform capitalism?’ To which McDonnell responded:

‘Yes it is. I think the Shadow Chancellor’s role is to put forward an alternative to what’s happening at the moment under our economic system that we’ve got.’

This is not the Marxism which the media has accused him of. It’s classic reformism – the view that capitalism can be gradually transformed into socialism through a series of social reform measures – as advocated by Eduard Bernstein at the turn of the last century and eventually adopted by the Social Democratic parties of Europe.

It only seemed wildly radical to the media because of what the Labour Party has evolved into over the years – a party that openly accepts capitalism and projects itself merely as a better and more efficient alternative manager of the capitalist system than the Tories.

In his speech to the Labour Party conference in September McDonnell made no mention even of gradually transforming capitalism into socialism, let alone of overthrowing it. He only promised policies which he said would end austerity:

‘We will dynamically grow our economy. We will strategically invest in the key industries and sectors that will deliver the sustainable long term growth that our country needs’.

Well, yes, of course, if there was growth then the government would not have to cut its spending –  ‘austerity’ in its proper sense – as its tax revenues would automatically go up too, allowing it to continue spending at the same level.  Governments were obliged to practise austerity as the crisis and consequent slump (the opposite of growth) meant that its tax revenues went down.

All supporters of capitalism realise that growth is the antidote to austerity, but the question is how to bring about growth? In fact can a government do this, ‘grow the economy’ as McDonnell put it?

In an interview on BBC 5 Live on 28 September, he remarked:

‘If you look at our capitalist system, one of the definitive analysts of how it works – not whether it is condemned, or whether it is right or wrong, just the mechanics of how it works, when it was first formed and how it would be developed – actually was Marx.’

True, but a key aspect of Marx’s analysis of the mechanics of capitalism is that governments cannot control its operation. Capitalism is governed by economic laws – capital accumulation before consumption personal and governmental, profits before people – which impose themselves on governments as an external necessity.

Government intervention cannot make capitalism work other than the way it does.  But the claim that it can is the whole basis of McDonnell’s policy (note that capitalist businesses and entrepreneurs are still going to exist, i.e. capitalism is):

‘We will create what Marianna Mazzucato describes as the entrepreneurial state. A strategic state that works in partnership with businesses, entrepreneurs and workers to stimulate growth’.

This is what the Labour government under Harold Wilson that came into office in 1964 tried to do but its ‘National Plan’ was a miserable failure. Wilson blamed it on the gnomes of Zurich. Actually, it was the economic laws of capitalism wot done it – and would again if ever McDonnell becomes Chancellor.