Cooking the Books: Yes, We Have No Economic Policy

Or, put another way, we don’t have any policy for trying to manage the capitalist system.

This is for two reasons.

First, we don’t want to manage the capitalist economy. We want to end it.

Second, we don’t think that it can be managed.

The economic policies of all the other parties assume that it can whereas experience shows that it can’t. Rather than governments controlling capitalism, it’s been the other way round. Governments have to react to what capitalism throws at them. They are like people in a small boat on a choppy sea, powerless to control what is happening to them and only able to take puny counter-action.

A revealing recent example of how governments can’t control the way capitalism works was the claim by Gordon Brown when he was Chancellor of the Exchequer, to have finally ended the boom/slump cycle (echoing, incidentally, a similar claim by Nigel Lawson twenty years earlier). Within a couple of years the biggest slump since the 1930s hit the world, including Britain.

All the Labour government and the subsequent Tory/Lib Dem coalition could do was to react to it. And react to it on capitalism’s terms – by cutting back on government spending so as to reduce the burden of taxation on profits, the lifeblood of the capitalist system, in the hope that sooner or later profitability would be restored and a profit-led recovery begin.

Ironically perhaps, this lets the Labour Party off the hook as far as one criticism is concerned – the Tories blaming the economic situation after 2008 on Labour’s economic policy. This is unfair as it was the internal workings of the capitalist system that brought about the slump. The history of capitalism shows that it goes through a repeating boom/slump/boom/slump cycle, with a big slump breaking out every 50-60 years. There’s nothing any government can do about this. So it was capitalism, not Labour, that has caused the ‘economic mess’ as the Tories called it.

But this works both ways. Just as capitalism spontaneously caused the crash of 2008 and subsequent slump it has also spontaneously caused the present modest economic recovery. The Tories are claiming this as the result of the economic policies pursued over the past five years. But they are claiming credit for something that was going to happen anyway sooner or later (in the event, far later than they expected) because in a slump the devaluation of capital and the fall in real wages, by restoring profitability, create the conditions for a profit-led recovery. That’s the way capitalism works.

So, governments can’t control the way the capitalist economy works. They can only work with it, putting profits and conditions for profit-making before meeting people’s needs adequately and before other considerations such as safety at work and protecting the environment. Capitalism is a profit system that runs on profits and can only work by giving them priority. Governments have to accept this and in the end they all do.

This is the only way capitalism can work. It can’t be reformed to work in any other way. This is why it has to go and be replaced by a system based on the common ownership and democratic control of productive resources so that we can really control what is produced and distributed. On this basis we can gear production to meeting needs instead of for the market or to make a profit, with people having free access to what they need in accordance with the principle ‘from each according to their ability, to each according to their needs’. In a word, socialism (in its original sense).