Socialists must fight to end capitalism not save it
A response to Common Weal and the Jimmy Reid Foundation
Matt Dobson, Socialist Party Scotland
The economy in Scotland is extremely vulnerable to the unprecedented depressionary crisis, accelerated by the pandemic, that may be the worst in British capitalism’s history.
The unemployment rate is now growing at the fastest rate of the four nations. The Scottish government’s most recent assessment of the impact on the Scottish economy by the Chief Economist, in June 2020, suggests a fall in GDP in Scotland of 33% during lockdown and 14% over the course of 2020.
The Scottish government’s scenario suggests unemployment could reach 10% later in 2020. One of the SNP’s main economic advisers, Andrew Wilson, predicts Scotland may emerge from lockdown with the worst performing economy in the developed world.
Even before the pandemic, Scotland’s economic growth rate in 2019 was a mere 0.7% with productivity and output their lowest in a decade.
Decades of deindustrialisation and successive neoliberal policies implemented by the Tories, New Labour and the SNP at Westminster and Holyrood has produced a hollowed out weak economy based on sectors most vulnerable to the impact of the pandemic lockdown restrictions. The service sector represents 75% of Scotland’s GDP, with tourism contributing a quarter of the economy.
A jobs slaughter has begun in the private sector, particularly in low paid retail and hospitality. The ending and winding down of the furlough/job retention scheme with the bosses looking to attack jobs, wages and conditions has the potential to be a major assault on the Scottish working class. Around 900,000 workers have been furloughed or have been part of the self-empolyed support scheme.
Higher paid sectors also face mass redundancies, such as aviation with British Airways and Swissport, engineering with Rolls Royce and North Sea oil.
The extraction of North Sea oil and gas for vast but short term profit, which was a significant support for British capitalism over decades, now looks threatened. Multinationals are reluctant to invest in new production and excavation fields. World market conditions, including the recent collapse in prices and fall in competitiveness, means this present crisis has cost 7,500 jobs in the industry.
Thus far, the Tory Westminster governments stimulus packages and the Scottish governments response will be unable to prevent “severe hardship” for the working and sizeable sections of the middle class. Both Tory chancellor Sunak and SNP First Minister Sturgeon say this is inevitable.
Ex Tesco bank boss Benny Higgins authored the Scottish Government Advisory Group on Economic Recovery. Higgin’s main proposals are that the current caps on borrowing powers of the devolved Scottish government are lifted to increase investment capability. This has now been requested by SNP finance minister Kate Forbes who states the only alternative is austerity cuts and tax rises.
He also proposes the recently created Scottish National Investment Bank issues its own bonds to be able to lend cash to businesses. Alongside this is a job guarantee scheme, where effectively private companies would get a state subsidy to take on under-twenty five year-olds.
Higgins represents a section of the capitalist class in Scotland who are concerned about continued decline in the financialised British economy dominated by the city of London and vulnerable to the disruption of deglobalisation and the weakness of international supply chains exposed by the pandemic.
Former SNP MP (and ex member of the International Marxist Group) George Kerevan has critiqued the Higgins report. Writing in left online magazine Conter recently, Kerevan points out, rightly, that effectively these proposals are a state subsidy to Scottish capitalists and big business, to try and boost capital investment without threatening their fundamental interests. He points out if this is implemented “There would be higher taxes to pay for increased state borrowing – any profits resulting from the investments would end up in private pockets. There might be (low paid) jobs, but again funded through higher taxes.”
It’s clear both the Tory and SNP governments, while prepared to use extensive measures of state intervention to prop up the capitalist system and try and facilitate a economic recovery, will attempt to make working and impoverished middle class people pay the price for the system’s crisis. But what alternative is the Scottish left putting forward? How would a socialist government respond to the crisis ?
Left ideas
Two left think tanks, the Jimmy Reid Foundation and the Common Weal, that have an influence on both the independence movement and in the case of the JRF the STUC, have now published reports raising demands and policies for a post-Covid economic recovery. Kerevan and other pro independence “lefts”participate on the board of the Common Weal.
Socialist Party Scotland responded to the proposals of the Common Weal in 2013 and 2014. The backdrop to their emergence was the fallout of the 2007-8 economic crash and anger at the Tories vicious austerity program that was being reflected in rising support for independence and the possibility of a different direction for society.
We stated that while agreeing with the Common Weal that fundamental change was needed to combat inequality, austerity and the ravages of capitalism, the alternative they put forward was flawed We pointed out that: “There is an old saying that Marxists often use; you can’t control what you don’t own. If the majority of the economy were left in the hands of capitalist interests then planning production to protect the environment, to create full employment and a living income for all would be impossible. Especially within the limits of crisis-ridden capitalism where the profit extracted from the labour of the working class is the over-riding priority”.
We can see that the experience of capitalism over the last six years, and especially the brutal deadly chaos of the last six months of the pandemic, bear this out. But has the Common Weal drawn a similar conclusion?
Before they released their proposals, they said their policies would represent the slogan that “everything must change”. Unfortunately, the Common Weal’s call for “Resilience Economics” is actually even less radical than that produced before the 2014 independence referendum.
Both the Common Weal and the Jimmy Reid Foundation call for many laudable reforms socialists would support and fight for. However taking their cue from the limitations of left populism and the left formations that emerged post-2008, such as Corbynism, Podemos in Spain and Bernie Sanders in the US, they only aim to end “rentier” “oligarchic”, “rigged”or “parasitic” capitalism. They have still not drawn the conclusion that capitalism as a system is structurally incapable of being anything else.
Implicit in their position is that society can be changed by the resilience of the proposals, with sections of the capitalist class even supporting them, rather than the working class, conscious of its own power, struggling for a clear socialist transformation of society.
In the case of the Common Weal, pessimistic conclusions from the election of the Boris Johnson government in 2019, the timid approach of the SNP over the second independence referendum and the defeat of Corbynism appear to have been drawn. Their exposition is of an extreme gradualness of how their ideas can be achieved.
All the proposals are strictly limited by what can be done with current devolved powers bar increasing borrowing, re-profiling of public procurement and extending the financial capabilities of the Scottish National Investment Bank. They even make the case that their policies can be interpreted as not violating EU rules limiting state aid and fair competition.
In 2019, the Common Weal produced an extensive policy document outlining a Green New Deal costed at £170 billion and with a twenty year plan to implement!
While independence is promoted by Common Weal, nothing is raised about how a mass struggle could be conducted by the working class for the democratic right for a second referendum. Or even more powers and funding for the Scottish Parliament.
The Common Weal state that their Resilience Economics plan would create “good jobs, economic equality, environmental sustainability and social cohesion”. We would argue that capitalism is completely incapable of delivering anything resembling this. The only way to win such a society is through far reaching socialist policies that can only be won through mass struggle.
Socialist Party Scotland supports full powers for the Scottish Parliament, including over borrowing. But this has to be as part of a strategy of utilising all financial mechanisms to fight the Tories in Westminster for the return of billions stolen in austerity and for the funding Scotland needs, in effect as part of fighting no cuts budget.
Rather than a strategy of confronting the Tories, the Common Weal and also the STUC and the Labour left put forward “local wealth building” using public procurement to invest in the local economy and small businesses. Through this they hope for a circular return in tax revenues. But such a model cannot sustain councils or the Scottish government in the context of huge underfunding of budgets.
MMT
The Common Weal are open about their support for Modern Monetary Theory (MMT) which now influences the left internationally. MMT is a neo-Keynesian theory put forward by some economists who argue debt can now be run up indefinitely, provided interest rates are low and preferably with state control over currency. (Common Weal support a new Scottish currency after independence) Inflation can be kept under control, the claim, as long as there are enough workers to meet growing demand.
However a major problem for capitalism is precisely a lack of demand for goods. Moreover one that is now much more serious since the Covid-19 pandemic and the dramatic recession that has resulted. Increasing debt levels through borrowing to fund the capitalist system can stave off a collapse for a period of time. But at a certain stage inflation will take off leading to further shocks. In Japan, often cited by MMT enthusiasts, no fewer than 18 stimulus packages were enacted during the 1990s and 2000s. Yet the Japanese economy remains mired in stagnation and has done so for decades.
The Common Weal’s limited proposals will not be enough to stop unemployment and the ongoing collapse in markets. The Common Weal say current devolved income tax powers are not enough to make a real difference to revenues. While there is some truth in this, Scotland’s 20 billionaires increased their wealth by 13 per cent this year.
The Jimmy Reid Foundation do in their Reconstructing Scotland report call for a tax on the super rich. And for HMRC to be given extensive powers to go after tax avoidance.
We support taxing the rich and big business. For example in Scotland a wealth tax of 90% on incomes over £80,000 would raise billions. Socialist Party Scotland also calls for a immediate 50% windfall tax on the hoarded wealth of the corporations in Britain, estimated to be £700 billion.
Of course when ex Labour leaders John McDonnell and Jeremy Corbyn raised the question of wealth taxes, a number of Britain’s wealthiest threatened to run with their money. Which is why it is vital to link this policy, which Corbynism did not, with a program of nationalisation of the major 150 corporations and banks in Britain and Scotland under democratic workers control and management. In addition to credit controls and a state monopoly of foreign trade.
While we agree fully with the Common Weal that all PFI/PPP contracts in the Scottish economy need to end and that public procurement should be fully utilised, plus the Scottish government and councils aggressively using Compulsory Purchase Orders against absent landlords and enacting land reform, we put forward real socialist nationalisation rather than elements of the mixed economy the Common Weal advocates.
The Common Weal proposals on a National Care Service are yet to be outlined. Even sections of the Tory party are now raising that the care sector be brought back into public ownership. The scandal of the high Covid-19 death rate in care homes has exposed the myriad of greedy profiteers who have their hands on care homes. We call for the care sector as a whole to be brought under council and NHS control through a programme of democratic public ownership.
entrepreneurial state
The Common Weal puts forward the concept of an “entrepreneurial state”. They say, “There will be a much better balance of business types (such as cooperatives and mutuals, social enterprises, worker-controlled businesses and public ownership) and sectors so that we do not become overly reliant on a single kind of business or a single economic activity”. It’s clear from this that Common Weal limit their proposals to a form of social capitalism, where the majority of the economy would remain in private hands and would therefore dominate over the cooperatives, social enterprises etc. But why leave big business and the capitalists in charge? Hasn’t the working class with the emergence of “key workers” decisively proven in this crisis that it can manage society better than the capitalists ?
Common Weal argues for the creation of “national public companies” in the post-Covid plan for the pharmaceutical industry, and in other policy documents for rail, energy and house building. Also that the Scottish National Investment Bank should go further than just issuing bonds but take over the mortgages of those threatened with evictions and struggling small businesses, negotiating buy outs with creditors and also giving credit to businesses.
But what is to stop the capitalists, organised on a multinational level, ruthlessly sabotaging these efforts? For example in the energy sector combining to drive a public energy company out of the market with a price war or even access to the national grid facility. (which Common Weal do not propose to nationalise in the immediate period).
We can also see in the pandemic crisis the escalating competition around research for treatments and a vaccine. How multinational companies and nation states wage economic and information wars upon one another. How would a public drugs company survive in the private capitalist market? Why not nationalise the whole industry, plus the laboratories and diagnostics, reversing the cuts to these facilities made by the SNP government.
Common Weal make correct points about the need to diversify the economy from its current neoliberal imbalances. They want to set up a national public agency to co-ordinate retraining and investment in “Green Reindustrialisation”.
There are some useful ideas put forward by the Common Weal about utilising Scotland’s natural resources such as forestry in sustainable wood-based house building construction. But it’s precisely the unwillingness of the capitalists to invest in new and green technology and search instead for short-term profit that holds the productive forces back.
A socialist plan of nationalisation in Scotland and internationally is needed. Rather than setting up small islands of public companies in the ocean of the capitalist market, the commanding heights of the economy need to be taken into democratic public ownership under the management of workers.
Socialists are prepared to pay compensation to owners and small shareholders based on proven need and the opening of the books of firms to worker and trade union scrutiny.
Everyone in society could participate in a socialist plan that could effectively re-diversify the Scottish economy. Elected committees in every workplace and then on a regional and national level, with representation of service users, trade unions and the socialist government, could plan for societies needs.
Rather than just a sole state investment bank providing support, taking the whole banking system into public ownership would mean a workers’-led Green New Deal, including a mass house building program on the scale the Common Weal envisage. The state aid to mortgage holders and small business they put forward could be done on a sustained and democratic scale.
A mass program of public works and job creation with the guarantee of work on completion of training at a living wage could also be implemented.
One of the papers in the JRF report calls for the North Sea workforce to be put on furlough while renewable energy is built up. Far better would be the taking of the oil and gas industry into public ownership so that the abundant skills of workers are redeployed without any loss of jobs and worsening of terms and conditions. The nationalised profits of big oil could be utilised for wind, tidal, solar and other forms of renewable power.
While major sectors of the capitalist economy are collapsing, some sectors have thrived under lockdown such as supermarkets, logistics and software. Why not take these under public ownership and utilise the vast profits generated?
UBI
The Common Weal and JRF both also discuss forms of Universal Basic Income. Papers in the JRF report advocate it while the Common Weal says under devolved powers costed at £6 billion for Scotland it cannot be afforded. Common Weal advocate intermediate measures such as UBI for the arts sector or UBI food cards for the poorest in society.
Socialists support measures that improve the living standards of the working class but the question is what level would UBI be and who would decide? In the hands of the capitalists it could be used to drive down wages and break collective bargaining.
A socialist government would immediately introduce a minimum wage of £12 an hour as a step to a living wage of £15. Along with the Common Weal we advocate a 35 hour week without loss of pay and sharing out of work. Wages should be linked to rises in prices. Public ownership of the main levers of the economy would allow price controls to be implemented.
It is significant that the leading figure in the Common Weal, Robin McAlpine, wrote an article for Source, the Common Weal news outlet, in June 2020, entitled: “I’m a socialist here to save capitalism”. He wrote: “I think the best way to see beyond capitalism is to create the best form of capitalism and, once there, see what the next best version of that is.”…. “So that’s what we’re trying to do at Common Weal, come up with a fix for now, and build it as a staging-post to something better still. It is us who are really championing enterprise, Scottish business and productivity. We have a vision for how that transforms Scotland.”
This approach is a dead-end. We don’t have time to implement “fixes for now” in the decaying system that is incapable of providing any kind of a future for workers, young people and the environment.
Neither Common Weal nor the JRF are facing up to the scale of the crisis in capitalism. One aspect of this is the growing anger of working-class people. As the recent BLM protests indicate, as do the movements in Lebanon, Chile and Belarus, this is world in revolt.
The burning need for a new mass workers’ party with socialist policies is growing by the day. While the Common Weal and JRF may well seek to influence elements of the policies of the SNP, Labour and Greens in Scotland, all of whom accept the framework of capitalism, they will not satisfy the aspirations of the working class and radical youth.
Socialism, however, does offer a real coherent alternative to the chaos and destructive nature of the profit-system.
