Sunday 31 December 2017

A Response to Larry Elliott


Never be fooled into thinking that the rich will allow you to vote away their wealth

- Lucy Parsons



Like any good communist, I spend probably too much time arguing with liberals. It may not be the most productive use of my time, but I tend to choose fun and easy over productive more often than I should. So when I saw Larry Elliott’s Guardian article, entitled “Think our governments can no longer control capitalism? You’ve been duped”, I was ready to start pointing and laughing before I even started reading. As I read the article, though, I realized that that was the wrong response. Larry Elliott, it turns out, is not the stereotypical clueless liberal who thinks that all it takes is a few Change.org petitions and a slight increase in corporation tax to solve all our problems. His analysis of the way that neoliberal orthodoxy has gradually replaced the post-war consensus is good shit. In the whole of this article, Elliott makes only one mistake; the problem (and the reason why I’m writing this response) is that his entire argument is built upon that mistake. Like all liberals, Elliott thinks that whoever controls the state controls the economy: in reality, the opposite is true.

                What I’m about to say will be familiar to anyone who’s watched my video “Democratic Socialism: Baby Steps to Nowhere”. While it may seem like the government runs the country – they are, after all, the ones who make the laws – in reality control lies with the capitalist class, and in particular the super-rich members of that class. The first draft of this post had a long rant here about the various socialist and social-democratic governments that were overthrown by the US and replaced with military dictatorships in order to protect the interests of the global capitalist class, but that was getting a little off topic, because capitalists don’t necessarily need to push powerful governments into military action in order to defeat left-wing and centrist economic policy. While they often have, from Yeltsin’s assault on the Russian parliament to the US-backed coup that crushed democracy in Iran, the capitalist class has other means at its disposal than brute force. Economists from Arthur Laffer to Judith Panadés have explained how increases in taxation on higher earners can actually lead to a reduction in tax revenue, due to an increase in tax avoidance and evasion. This will come as no surprise to most liberals – barely a day goes by without a left-wing or centre-right Facebook page posting a meme about the rich not paying their fair share of tax.  And yet, somehow, these same people think that we can fund Attlee-style reforms by raising the taxes that the super-rich don’t pay.

                Of course, there are some who say that the answer to this problem is simple – just close the tax loopholes, and Richard Branson et al will have to pay up. I certainly said similar things when I was a liberal, because I didn’t understand just how much power a certain level of wealth confers. These are people who can take their money and go. If the loopholes get too tight, the wages too high, or the unions too strong, they can take their business to a country where the workers are easier to exploit. They can arrange capital strikes. They can lobby governments to impose sanctions. Economic warfare can be every bit as destructive as the normal kind, and it can be even more difficult to resist.

                If a British government were to introduce the kind of sweeping social reforms that Attlee or Chavez did, think about what the response would be from those who have the most to lose from such reforms. For a start, let’s look at the financial sector, where 3.1% of our jobs are located and which last year contributed 7.2% of gross value added to our economy. If our government were to start introducing measures such as bonus caps, tighter tax laws, stricter regulations and so on, there would be an immediate backlash – in fact, we could expect the mass exodus of funds to happen before the changes to our laws were even implemented. It would be chaos. And that’s not even taking into account the other sectors of the economy where major business owners would be eager to penalize any government that had the audacity to challenge them. Think Venezuela meets the Winter of Discontent. The fact is that we’ve been paying the Danegeld for decades, and the Danes aren’t going to leave us alone without a fight.



So why, then, you might ask, did Clement Attlee, FDR, Einar Gerhardsen and the other famous reformers manage to make such huge changes without provoking such a response? Well, Larry Elliott actually touches on this in his article:



Consider the facts. By almost any measure, the past decade has been a disaster for living standards. Unemployment has fallen from its post financial-crisis peaks across the developed world but workers have found it hard to make ends meet. Earnings growth has halved in the UK even though the latest set of unemployment figures show that the jobless rate is the lowest since 1975.



The reason is not hard to find. Unions are far less powerful; collective bargaining in most of the private sector is a thing of the past; part-time working has boomed; and people who were once employed by a company are now part of the gig economy.[1]



In the past, unions were stronger, which meant workers had more ability to directly resist their employers – this is why the first order of business for the neoliberal governments of the ‘70s and ‘80s was to break the strength of those unions. On top of that, it was simply much harder for manufacturers to up sticks and move production to China or Bangladesh, which meant that they had a more limited pool of labour to draw on. Finally, there was the looming threat of revolution or revolt. In the 1930s, when Franklin Roosevelt proposed the New Deal, it had been just over a decade since ten thousand miners took part in an armed uprising in West Virginia, and the Farmers’ Holiday Association were blockading highways in the Midwest, threatening to starve the cities in protest at farm foreclosures. In the UK, two years before Clement Attlee was elected Prime Minister, civil unrest was so great that Conservative MP Quintin Hogg was heard to remark, “we must give them reform or they will give us revolution.” Ever present in the minds of the ruling class was the red spectre of the Soviet Union; all they had to do was look to Russia, where just two or three decades earlier what they feared had actually happened.

                Compare that to now, when union membership is at an all-time low, the Overton window is shifting further to the right every year, and the very word “socialism” has been co-opted by the centre-right. The threat of militant action that made past reforms possible is simply no longer there. The ruling class hold all the cards, and electing a moderate centrist or centre-left government is not going to change that.

                What will change it, then? We will. Or we can, at least. An organized, politically conscious public is far more dangerous to those in power than Corbyn or Sanders. We need to stop looking to politicians for help and start helping each other, and ourselves, by engaging in meaningful political action where we are – change comes from the street, not the ballot box.



[1] https://www.theguardian.com/commentisfree/2017/dec/14/governments-control-capitalism-class-war-right-undermine-workers

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