A united front with the Financial Times?

The tiny group Socialist Action (still formally Trotskyist but in practice highly Stalinist) has recently published an article, ‘Two classes, two responses to the crisis’ which purports to offer a working-class alternative to austerity. It does no such thing.

After decades of “entryism” into the Labour Party so deep that it has become indistinguishable from careerism, Socialist Action have long dropped any attachment to revolutionary socialism. What they offer here is a sort of reheated national-Keynesianism with a working-class gloss. It contains nothing in the way of working-class struggle, democracy or international socialism.

The article begins by offering a summary of recent Keynesian critiques of British Government economic policy from the chief economics commentator of the Financial Times Martin Wolf, the director of the National Institute of Economic and Social Research Jonathan Portes, and the Noble-prize winning economist Paul Krugman. All argue that the Government is intensifying the crisis by cutting its investment during the current recession.

Socialist Action correctly point out that certain sections of capital are also clamouring for an increase in infrastructural investment, citing the “multiplier effect” that this would have on economic activity (adding extra demand by creating jobs in capital projects). However, the bosses’ lobby-group the Confederation for British Industry (CBI) and the Institute of Directors (IoD) are, according to Socialist Action, advocating “a broadening of the reactionary agenda, not a retreat from it.” This is evidenced by calls for greater financial deregulation, further cuts to social expenditure and the bonfire of employment rights contained in the Government’s own Beecroft Report.

This is all true but Socialist Action’s criticism that capital’s plan for the crisis “is not ‘investment, not cuts’, which summarises the necessary strategic response to the crisis [but] ‘investment plus more cuts’” draws a false dividing line which only serves to obscure an alternative working-class policy.

For Socialist Action, the “class” dividing line is “investment not cuts” versus “cuts not investment”. If this is the case, only by churlish arbitrariness can Socialist Action exclude Wolf and Portes from the “proletarian” side, even though Wolf is a keen supporter of German-style “flexible” labour markets (ie. limiting workers’ rights, mini-jobs etc) and even Krugman has no ideological objection to austerity measures besides their obvious economic inefficacy. In short, the watchword “investment, not cuts” does nothing to distinguish a working-class socialist policy from the left-wing of capital.

Another false dividing line drawn by Socialist Action concerns the question of the state.

The problem with capital’s solution to the crisis, we are told, is that despite their arguments in favour of investment, the CBI, the IoD and others “remain utterly opposed to the state itself leading that investment.”

The second dividing line is thus “state-led investment” versus “state inducement towards private investment.” The solution of the “working class and its allies” (who? Martin Wolf? the Chinese Government?) is “state-led investment, taking sectors of the economy out of the hands of the capitalists in order to provide what is socially and economically necessary, large scale investment in key sectors such as housing, transport, infrastructure and education.”

It is clear that Socialist Action means state-capitalist investment by the capitalist state. Clearly this would be preferable to austerity in the sense that capitalist growth can give better conditions to workers than capitalist slump but it has nothing necessarily in common with socialism.

As Marx wrote in Chapter 25 of Capital of the increased demand for labour power which accompanies the accumulation of capital: “just as little as better clothing, food, and treatment do away with the exploitation of the slave, so little do they set aside that of the wage worker. A rise in the price of labour, as a consequence of accumulation of capital, only means, in fact, that the length and weight of the golden chain the wage worker has already forged for himself, allow of a relaxation of the tension of it.”

In other words, while better than austerity, state-capitalist investment is not a working-class alternative to capitalism.

Although the statification of particular sectors of the economy would take certain industries from the hands of particular capitalists, nationalisation itself is not anti-capitalist and does not necessarily challenge the rule of capital in general.

This was the case in Britain after the Second World War when the Labour Government of Clement Attlee nationalised gas, coal, electricity and the Bank of England. Industries functioned in more or less the same way, often with the same managers, and the Government was no more strike-friendly than any other, using the army to break strikes on the docks in 1948 and 1949.

A second problem with calling merely for state-led investment and nationalisation is that is that there is no necessary role for democracy, let alone a socialist revolution to overthrow capitalism and create a workers’ state.

As James Connolly wrote in a polemic against Fabianism, “state ownership and control is not necessarily Socialism — if it were, then the Army, the Navy, the Police, the Judges, the Gaolers, the Informers, and the Hangmen, all would all be Socialist functionaries, as they are State officials — but the ownership by the State of all the land and materials for labour, combined with the co-operative control by the workers of such land and materials, would be Socialism... To the cry of the middle class reformers, ‘make this or that the property of the government,’ we reply, ‘yes, in proportion as the workers are ready to make the government their property.’

The means by which workers “make the government their property” is through working-class democracy at every level of society.

As the American “third camp” socialist Hal Draper explained, against the idea that the USSR was a “workers’ state” on account of having state-owned property but applicable here too: “The working-class is not by its nature, and never can be, an owning class like previous ruling classes. It can ‘take over’ the economy in only one way: collectively, through its own institutions. It can exercise economic power only through its political power. The expression of this proletarian political power can be given in two words: workers’ democracy.”

Being charitable, it could be said that Socialist Action missed this point having imbibed much Fabianism after years of swimming amongst the currents of the Labour Party bureaucracy. This would be tenable if it were not for the group’s favourable opinion of the viciously anti-working class state-capitalist dictatorship in China and the group’s description of the fall of the USSR and the Eastern Bloc police states as “the greatest defeats suffered by the working class since World War Two and overturn the post-war world order.”

It is indicative of a deeper problem with Socialist Action’s politics. Socialist Action represent a toxic mix of reformism and Stalinism which explains the complete absence of democracy from this “alternative” and the patent lack of radicalism inherent in its state-capitalist Keynesianism.

There is a historical precedent. In many ways Socialist Action are reminiscent of those in the British labour movement such as Sidney and Beatrice Webb and George Bernard Shaw who lauded the Stalinist USSR for its anti-capitalist and “rational” organisation of society whilst opposing more left-wing revolutionary forces at home — “socialism in one country; just not this one.”

In a critique of Shaw’s conception of socialism written in the 1920s for the Independent Labour Party’s newspaper The New Leader, the socialist journalist H N Brailsford explained that the difference between reformist Fabianism and working-class socialism amounts to democracy. If, as Shaw held, “‘Socialism means equality of income, and nothing else”, it has no necessary democratic component. If income equality was the essence of the system, argued Brailsford, “it might be set up and administered by a benevolent despot.” However, “if it is concerned primarily with the question of power, it cannot have a non-committal attitude to the issues of democracy. Aiming at a transfer of power to the workers (and, therefore, eventually to the whole community), democracy must be its foundation.”

As well as not challenging capitalism, Socialist Action’s “alternative” is national in scope and does not challenge the myopic failure of European social democracy to look beyond its own national frontiers. The only criticism of the Labour leadership is that it is not Keynesian enough, that its plans would not stimulate enough demand.

The crisis of capitalism we face is global in scope and the crisis of the Eurozone is particularly sharp and immediate. In narrow bourgeois terms, stimulating British household demand in the name of classless categories such as “the economy as a whole” (the reproduction of capitalist accumulation on an extended scale?) would indeed improve one problem.

As Larry Elliott has commented, “a breakdown of GDP from the Office for Budget Responsibility showed that weak private consumption shaved 0.5 points off growth and lower government consumption a further 0.3 points” in 2011, and that declining overall output was only saved by an increase in net trade. However, the British economy is not isolated and we must take into consideration the performance of the overall world economy. As of May 2012, UK trade with the EU fell to 45%, its lowest level since 1988, and a stronger pound vis-a-vis the euro will depress British exports.

Even if British capitalism could save itself in isolation from the world economy, socialists should not advocate that it does so.

The interests of the working-class are in breaking down national barriers to create larger units in order to increase the general level of the productive forces and unite the working-class across borders; we have no interests in tariff barriers, sharpened national competition, internal devaluation through crude cost-cutting and repressed wages, and the drive to war stimulated by inter-imperialist rivalry.

The working-class solution to the present crisis is to fight at home for a workers’ government and at the same time to unite the struggles of the working-class across Europe for a democratic, republican and socialist United States of Europe. We must fight for the levelling up of pay, conditions, workers’ rights and pensions, and for the taking of high finance across Europe under workers’ control.

This can only be done if we break from the national-Keynesian perspective of the social democratic bureaucracy and advocate working-class transitional demands combined with a revolutionary programme to overthrow capitalism at home and across Europe.

• www.socialistaction.net/Economics/Two-classes-two-responses-to-the-crisis.html