HARD TIMES
BOB SUTCLIFFE
The crisis of the capitalist economies shows
no sign of retreating in 1983. We reproduce
below a chapter on the capitalists' response to the crisis from a forthcoming book by Bob
Sutcliffe entitled Hard Times (World
Economy in Turmoil) to be published in
March by Pluto Press, as part of their
Arguments for Socialism series.
The economic crisis raises vital problems or imposes heavy burdens on virtually all those who live in capitalist society — except maybe for a few clever or lucky profiteers who gain out of the misfortunes of others.
But different social groups see a very different content to the crisis. Most capitalists see first and foremost a decline in their rate of profit and they imagine a whole set of other things to be associated with this: wages rising "too fast', productivity rising too slowly', inflation, high interest rates, high raw material prices, stagnant markets and so on. But as a whole the capitalist class has not arrived at a consistent and unified view of what the crisis consists of and why it is happening, let alone of what to do about it. The old intellectual certainties of Keynesianism, so universally held, have been exploded altogether and the old consensus politics replaced by polarisation. The cconomically impossible has now happened so many times and in so many places that there is no longer any accepted conventional wisdom about the economy except that things are bad and will quite probably worsen before they get better.
Increasingly the bourgeoisie, politically and intellectually, is dividing into two camps. One camp, the radical Right, is dominated by the threat to the overall system of profitable exploitation posed by the economic crisis. Members of that camp see the question ever more clearly in class terms and have set themselves consciously the task of undoing the economic knot
the boom years by arranging a fundamental redistribution of wealth and power away from working people and their families. If this
involves the creation of mass
unemployment and the manifest failure to meet even elementary social needs then, they say, so be it. Virtually all capitalist governments have in the last decade made important inroads into traditional democratic freedoms. And there are growing signs in a number of countries that the kind of solutions envisaged by this section of the bourgeoisie, or even lesser austerity programmes, simply cannot be carried out in the context of parliamentary democracy and trade union freedoms. We can expect that the most determined and perspicacious sections of this part of the bourgeoisic will act on the consequences and move, perhaps in alliance with the erratically growing fascists, towards more authoritarian solutions.
Another section of the bourgeoisie, though not at present imbued with such political prestige or influence, and in Britain referred to as the 'wets', a male-chauvinist term coined by those to their right, recoils in horror at the extreme consequences of the measures which the radical Right tell them are necessary to preserve the capitalist system which they support. Intellectually they represent the remains of Keynesianism. They are to be found both in the "left' of capitalist parties and in the reformist workers" parties such as the British Labour Party, the French and Spanish Socialist Parties, the German Democrats and the 'Eurocommunist parties. Though they support more state spending to preserve employment, and
International Features more cconomic aid to combat world poverty, they do not represent a radical current. They are for the most part clinging to old, used policies which have lost prestige because they have been seen to fail. Often, therefore, their hopes, like those of less closcted lovers of the free market, are placed on some semiautomatic upturn in the economy.
The failure of governments in capitalist countries to unite on a strategy to deal with the crisis partly reflects the fact that there are objective differences of interest between distinct sections of the capitalist class.
economic policies from which all sections of capital can
A marxist analysis of the crisis helps us to understand why this is so. The process of raising the rate of profit after it has fallen to unacceptable levels consists, according to marxist analysis, of raising the amount of surplus value produced and realised, or lowering the value of the total capital over which it must be shared, or some combination of the two. The important thing, as discussed earlier, is to increase surplus value relative to the value of capital.
This means that some sections of capital which may be able to raise the productivity of the workforce in their employ or which may have a buoyant market for their product, will oppose policies which are designed to keep afloat those sections of capital which are not so favourably placed. From the point of view of the survival of the capitalist class the more successful sections of it may well support the idea that the crisis would be helped by the destruction or purge of the less successful portion of capital. Yet obviously those more hard-pressed sections of capital will favour policies which help them to survive, and that almost certainly means policies which, usually via the state, redistribute surplus value. Conflicts over policy within the capitalist class, therefore, very often centre around the question of state expenditure and the extent to which it should be
A related source of conflict concerns the question of wages. In one sense all sections of capital will benefit if wages can be curtailed relative to productivity since, other things being equal, this will raise the rate of exploitation of the labour force. On the other hand a whole section of capital depends for its survival on producing commodities which are by and large consumed by the working class. For them any curtailment of wages, therefore, is a curtailment of the market for their products and so of their ability to realise surplus value.
Ultimately for the capitalists as a whole, this is a conflict or contradition which cannot be completely resolved. It demands a perpetual balancing out. But for sections of capital in the short run there may seem to be no contradiction at all. So the contradiction for capital as a whole gets expression as a conflict of interest and policy between different sections of the capitalist class over state expenditure and wage control in particular.
A related dispute concerns international trade and protection. Protectionism and the shrinkage of markets which it usually brings about, is not in the interests of capital as a whole on a world scale. Nonetheless certain sections of capital, those subjected to the hottest competition and which produce mainly for the home market, may well see protection as a perfect solution to their own immediate problems.
All these objective conflicts of economic interest are part of the cause of the differences over policy which have erupted in the capitalist class since the present crisis commenced. In addition, there are differences which are more political in nature. Even if the economic objectives could be sorted out, there would remain disagreements over how much the necessary strategy to increase the rate of profit should be imposed through head-on political conflict with the potential victims of the policies and how much those victims should be cajoled and persuaded to collaborate in their own fate.
International January-April 1983 J There seems to be no set of
4 January-April 1965
International Features
SMALL STRET LOEM.
- First I was a Keynesian..
Next I was a monetarist..
Now I'm a bum.
Then a supply-sider
The radical Right — Thatcher and Reagan
The break-up of the economic consensus in capitalist societies has partly been the result of the emergence of new strategies of the "radical Right" in dealing with the problems which the crisis raises before the capitalist class.
As already mentioned, one of the main differences between the old Keynesian section of the bourgeoisie and the new radical Right has been over the question of state expenditure. Radical Right governments have launched ambitious plans to make major reductions in state-provided services and state support for industry and other subsidies, combined usually with plans for simultaneous cuts in taxation to restore incentives in the private economy and produce a radical reversal in the tendency of modern capitalism towards greater state involvement in pro*.. to help the poor and the middle classes one must reduce the taxes of the rich ...' is
the claim of the supply-siders
Closely linked with this attitude towards state spending is a policy of severe control of money supply which many right wingers argue gets out of control and causes inflation mainly through uncontrolled state spending and debt. Though backed up with sophisticated-looking statistics, this monetarism is really no more than old fashioned deflation.
These more traditional right-wing policies of opposition to the big state and financial conservatism have recently been joined by a new variety of right-wing economic doctrine known in America as "supply-side economics'. Supply-siders argue that policies affecting demand can't work. The cost of reducing inMation by cutting state demand is a degree of slump which even to them is unacceptable. The problem, they say, is to reverse the built-in tendency of the system to discourage saving and investment. And that, they argue, means increasing incentives for the potential investors, that is, the Right and the capitalists. And that, in turn, means cutting the marginal tax rates for higher inSome of them even maintain that such a policy will actually increase government tax revenue because of the stimulus it
would give to economic activity. But their main point is that supply-side policies of tax reductions for the rich would benefit everybody since they are the only way in which investment. rapid growth, reindustrialisation, the return of full employment and prosperity can be restored.
Of course these supply-siders with their complete opposition to progressive taxes (ie higher tax rates on higher incomes) hark back to earlier right-wing traditions. As one of their American advocates, the journalist George Gilder, has proclaimed: *Regressive taxes help the poor... To help the poor and middle classes one must reduce the tax rates of the rich. A series of similar remarks could no doubt be traced back to Marie Antoinette and beyond.
like
class.
within
capitalist
the
Supply-siders
unreconstructed Keynesians, hold the view that recovery from the crisis can take place without basic opposition between the capitalists and the working classes. They are fond of quoting John F Kennedy's remark that 'a rising tide lifts all boats"
Although the supply-siders have been gaining influence, in general the purist ones are regarded as cranks even by the capitalist class. But the effect of their one-sided ideas has been to concentrate more attention within the ruling class on the problems which marxists would see as being associated with the production rather than the realisation of surplus value. In this sense they redress some of the imbalance of the traditional Keynesian approach. Their tax policies have often been combined with sections of the bourgeoisie with a more ruthless approach towards the weaker sections of capital to produce some of the new Right policies which have been enunciated by the governments of Margaret Thatcher in Britain and Ronald Reagan in the USA.
But the more far-sighted sections of this New Right maintain an understanding that neither Keynesianism nor supply-side economics are the magic wand they claim to be. Both of them ignore the very basic fact of class conflict within capitalist society and conceal the fact that the resolution of the crisis cannot take place without a major shift in the balance of class forces.
Thatcher and Reagan have in common a knowledge that the implementation of their policies will require a frontal attack on the working class through unemployment, the wholesale destruction of social services and real wage cuts. In order to achieve these it will probably be necessary for big fights to take place between the employers and government on the one hand and trade unions on the other.
A realisation of what is necessary, however, does not mean that it can be casily achieved, as a look at the chequered careers of Thatcherism and Reaganomics shows.
In Britain the landslide clection victory of Margaret Thatcher's radical Right
government in 1979 has been described by its chief economic minister Geoffrey Howe as being like the arrival of the US cavalry in a Hollywood western. Initially, indeed, the Thatcher government seemed to be a new authoritative beacon for the bourgeoisie on a world scale; yet by early 1982 it was fighting for its political life with virtually all of its once shining economic policies badly tarnished. It was only able to quench the fires of public discontent by directing at them a hose of chauvinist propaganda and waging war against Argentina. For a time economic opposition to Thatcher could virtually be branded as pro-Argentinian treason. Thatcher's political comeback in mid-1982 certainly had nothing to do with economic success.
The problems of Thatcherism have partly been economic ones in the narrow sense. Efforts to cut the money supply have failed because a good portion of the monetary system is not effectively within the control of the state monetary authorities. Second, efforts to cut government spending and the state sector deficit have failed because what the policies cut from state spending by the ending of health, education and other services, they add on in the form of unemployment and social security
benefits. A parliamentary Select Committee recently estimated that in Britain the cost to the state of the present level of unemployment was £15 billion a year — one and half times the size of the government deficit.
The sharpness of this problem was not quite foreseen by the Thatcher government. Certainly they intended to create mass unemployment but they probably did not envisage that this would be on the scale that has in fact occurred. That. perhaps, more than anything else, has led to the rapid political disillusionment with the Thatcher government. And the fear of the political consequences for its survival has led a section of the government itself to be increasingly openly hostile to fullblooded Thatcherism and have also led to important retreats by the more hard-core Thatcherites themselves. For example, Minister
of Industry, Keith Joseph, continued financial aid
nationalised
to various loss-making
to
which
should, according
his own criteria, have gone
bankrupt and piled even more workers on to the unemployment scrapheap.
In addition, the experiences of Thatcher and now Reagan are revealing another problem with the monctarist aspect of
- that it is almost bound to lead to international their strategy
divisions within the ranks of the capitalist countries. Recent economic summits at Ottawa in 1981 and Versailles in 1982 found all the other capitalist countries, including Britain, putting pressure on Ronald Reagan to take steps to reduce interest rates in the USA and so reduce the pressure that high American interest rates pile on their own economics. Monetarism has turned out to be necessarily monetarism in one country. Like Keynesianism and protectionism it turns out to be a policy which may do something to alleviate the economic problems of one capitalist nation but only at the cost of worsening those of others.
The bold experiment of Thatcherism then has fallen far short of its objectives. So far it looks as if Reaganomics is not going to fare any better.
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International Features Reaganomics — an inconsistent experiment
Compared with its immediate predecessors, Reaganomics is a radical new attempt to solve the problems of capitalist crisis, clearly in the interests of the capitalist class.
Radical and new it may be — but intellectually coherent it is not. in fact, the Reagan administration consists of an alliance, or perhaps more appropriately a scrambled mish-mash. of several economic ideas. First there are the budget balancers, led until recently by Reagan himself. Their main economic objective in the period up to 1984 is, or rather was, the complete climination of the budget deficit. Given that Reagan was elected on a grandiose promise to cut taxes by 30 per cent during his term of office and at the same time vastly increase military spending, this means that the policy of cutting the and
private industries
deficit implies huge cuts in government spending on virtually everything other than the military.
Reagan's chief lieutenant in his programme of ruthless cuts has been David Stockman, a young former Congressman, appointed by Reagan as Director of the Office of Management and the Budget. From the OMB, Stockman has since 1980 conducted an obsessional drive against every aspect of government spending. The emphasis of this drive has been against what have been euphemistically termed non-essential services' (that is, anything which directly affects the welfare of disadvantaged citizens). The consequences of this first major dose of Reaganomics, as of Thatcherism, is that those in society who were disadvantaged to begin with are relatively the worst hit. because they have relied most on the government programmes established during the boom.
Reagan's cuts campaign reached its reductio ad absurdum when such proposals were seriously made as the redefinition of tomato ketchup as a vegetable so that the cost of school meals could be reduced while meeting statutory nutritional standards. Public ridicule, and opposition even by a leading member of the Heinz family to the elevation of ketchup, led to the withdrawal
AĞTioN
International January April 1983 5
6 lanuary-April 1983 International
International Features of this proposal. But the cutbacks have meant the removal or reduction in availability of food stamps and of medical aid to several million needy Americans. And the real value of many state benefits were reduced during the first two years of Reagan's administration.
But the budget deficit was not cut. At first it went on soaring out of control with each successive estimate. This did not greatly worry the second element of the Reaganomics coalition - the supply-siders. In spite of their general opposition to spending cuts, the supply-siders have seen one of their best selling books, George Gilder's Wealth and Poverty, praised by David Stockman as 'Promethean in its intellectual power and insight* and journalist Gilder at once returned the compliment.
if Nixon's was the administration of expletives, Reagan's is the administration of
euphamisms
In Wealth and Poverty he endorses the economic theories of an obscure Southern Californian Professor of Business named Arthur Laffer (whose "Laffer curve' allegedly proves that tax cuts increase government revenue), and endorses the similar ideas of Wall Street Journal editor Jude Wanniski, author of The Way the World Works. Of the latter work, Laffer has said, *In all honesty, I believe it is the best book on economics ever written'. Just as they insist that capitalists thrive on unfettered opportunities to make profit, supply-siders themselves appear to thrive on adulation (most of it mutual).
These intellectual (for want of a better word) high priests of the supply-side say that for capital to recover, all assistance may be given to the present and potential entrepreneurs. That means (they say) allowing capitalist investors to pocket more of their carnings - and so, more than anything, reducing taxes, especially on profits and any other form of capitalist income.
The tax cuts introduced under Reagan will make very little difference to the real take-home pay of lower and middle-paid workers. All that can be said is that without the tax cuts, the amount they pay in taxes would have tended to go up. And in 1982 the administration changed tack on the tax question by forcing through Congress an Act which would raise taxes by $100 billion a year by means of what were euphemistically called 'measures of revenue enhancement*. (If Nixon's was the administration of expletives, Reagan's is the administration of euphemisms.)
Tax cuts were never very popular with the third element in the Reaganomics coalition - the monetarists - whose high priest is Milton Friedman. Though Reagan himself is much less dogmatically monetarist than, for example, the Thatcher government, it is ironically the monetarists who have so far achieved more of their stated policy than any other part of the coalition. And this, also ironically, is due to an appointee of President Jimmy Carter, Paul Volcker, the chairman of the Federal Reserve Board, who has turned out to be so successful at cutting the money supply that the senior members of the Reagan administration, from the President downwards, have been publicly asking him to stop.
monetarist policies — the high interest rates Britain, imposing serious financial burdens on those buying a home on a mortgage or goods on hire purchase (in response to falling real wages, credit purchases have expanded rapidly in recent years in the USA). High interest rates have also led many unprofitable, debt-laden firms dangerously close to the edge of bankruptcy.
Hence in the build-up to the Congressional elections of 1982 interest rates were, at least temporarily, reduced. But the problem of massive prospective government deficits remained and threatened to push interest rates up again.
There is a further item of Reaganomics on which all its factions agree — deregulation, or 'getting the Federal government
off the backs of the capitalists". Deregulation has become another euphemism for turning the whole of the USA into an enterprise zone where capital can behave in an entirely uninhibited way. For instance, it will come as a surprise to the cynical that until Reagan's "deregulation', Federal regulations had dictated that American manufacturers might not make untrue statements in their advertising!
A much more serious aspect of deregulation is the attempt to dismantle health and safety regulations in industry. Car safety regulations have already been eased. Also the number of prosecutions initiated by the US Justice Department for environmental protection violations has been sharply cut back under Reagan. What dominates the administration's thinking is that at least in the short run a polluted land and an unsafe and less healthy land could be a more profitable land
On the other hand, despite the obsession and energy which is going into cutbacks and deregulations, there remains a Grand Canyon in Reagan's America between effort and results. Reaganomics retains some credibility in the USA today, like Thatcherism in Britain, largely as a result of the confusion of its opponents and the paucity of the alternatives they have up to
The results of Reaganomics so far confirm one of the experiences of the Thatcher disaster in Britain: that no matter how hard governments of
cconomies try to cut government spending, it is very hard to achieve. But the Reagan administration seems to have realised, perhaps faster than Thatcher did, the profound obstacle to its programmes which is posed by 'entitlement" — the legal right to receive certain benefits such as free or subsidised health care and education, unemployment pay, old age pensions, and welfare benefits, even though these are still more limited in scope in the USA than in many European countries.
Despite the efforts of Reagan so far most of this entitlement — the essence of the so-called 'welfare state' Yet his programme calls for budget cuts of hundreds of billions of dollars over the next three years. This can only be done by a basic attack on all these kinds of entitlement. And that is what is now being prepared in detail by the agencies of Federal
On its showing so far, Reaganomics is neither consistent monetarism, nor classic deflationism and fiscal conservatism, nor born-again militant supply-side economics. At present its contradictory and, by its own standards, incomplete policies seem headed for the same sorry fate as those of Thatcher in Britain: the aggravation of economic slump without any significant lessening in the travails of capital; the loss in this process of electoral support; and the gaining of a reputation for giving the corporations and the rich what they want while imposing cruel and unusual economic tortures on the poor.
Reaganomics soon changed from decisive and radical sounding oratory to a babble of conflicting voices from the administration and Congressional leaders. And from the President no longer come the confident predictions of 1980 but rather vague and ambiguous conjectures - much like the astrology on which he and Nancy Reagan are said to be very The family, the nation and race
The so-called new Right in the USA (a myriad of tiny ultraconservative groups, many of them religious have formed a vanguard to propagate reactionary positions on a number of non-economic issues including race, the family, the rights and role of women, homosexuality, patriotism, militarism and so on.
In the light of history these developments are not surprising. When the authority or means of existence of a ruling class have been threatened, as are those of the capitalist class today, these have all been methods commonly used in order to help turn the tide. An obvious way of strengthening the power of rulers is to foster divisions among the ruled.
discrimination and in the end genocide against Jews in Central
modern advanced capitalist
In the 1930s bigotry,
Europe were used in this way. Today anti-Semitism is far from dead. But the forms of bigotry and discrimination which threaten to grow fastest are against blacks, foreigners, women, gay people and youth. Such groups are prime targets at present because of the way in which they have organised to gain more rights in the advanced countries in the boom years. A particularly common kind of demand in this respect is for the repatriation of immigrants.
Political reaction in our century has also usually gone along with the ideology of the family. When authority at the centre of society is threatened it tends to buttress itself with the most obviously available micro-unit of social discipline — the family. The aspects of the family which get stressed are the authority of men over women, and of adults over children, and restrictive sexual morality especially as applied to women and gay people. Reaganomics and Thatcherism retain some credibility largely as a result of the confusion
of its opponents and the paucity of the
alternatives they have up to now devised
George Gilder, from whose best seller Poverty and Wealth we have already quoted, attributes the current capitalist crisis to the decline of the authority of men:
*The man has the gradually sinking feeling that his role as
provider, the definitive male activity from the primal days
of the hunt and on into modern life, has been largely seized
from him; he has been cuckolded by the compassionate
The American New Right has partly supported Reagan's economic policies because they seem likely to give women the maximum opportunity to return to where the New Right thinks they belong — the kitchen. The Moral Majority and other religious groups which compose much of the New Right have mounted a massive campaign in favour of what they see as the stabilising conservative influence of the family.
The Family Protection Act
scope directed against the existing rights of women, minorities, youth and gays — has been introduced by supporters of the New Right in the US Congress where, along with anti-abortion legislation, it seems to be gaining ground. Even if not passed, its continual discussion contributes to a change in moral climate. Already the Moral Majority has succeeded in defeating laws at the local level in the USA which would have legalised homosex-
- a punitive measure with vast
International January April 1983 7
International Features uality and liberalised other laws on sexual conduct.
Some of these same tendencies have been visible in Britain. Faced with a rebellion of especially black youth in British cities in the summer of 1981, the government of Margaret Thatcher blamed parents for their children's indiscipline. And since then Thatcher has stepped up her propaganda offensive on the value of the family, helped coincidentally by the temporary loss of a son in the Sahara desert! It isn't only the Tories who have turned to the image of the family for succour and support. In the 1979 general election the Labour Party published a special broadsheet glorifying the family by James Callaghan. And as Prime Minister, Callaghan, in deference to the Rev lan Paisley's anti-gay campaign "Save Ulster from Sodomy' withdrew a plan to legalise homosexual conduct between men in Northern Ireland. In exchange he was rewarded by the Ulster Unionists not voting against his shaky government on issues of confidence.
The various reverends of all these extreme organisations are probably not on their way to political power. But they serve an important function, at a time when the capitalist class is in search of a radical political alternative, of shifting the centre of politics to the right and of undermining the chances of building alliances of the oppressed.
Problems of a capitalist solution
So far then it appears that although the bold-sounding New Right economic experiments of Thatcherism and Reaganomics are heading for failure, and although they have caused millions of people to suffer in the process, the likelihood of a radical capitalist alternative to them in the near future is quite small.
The only other runner currently in sight is a plan based on the ideas of New York financier Felix Rohatyn. He has proposed a scheme to channel vast amounts of state funds through a kind of Industrial Reconstruction Finance Corporation to private industry to finance investment. This might be combined with the cutback of state-provided services and the implementation of wage controls and tax penalties against firms raising prices. Rohatyn used such a scheme to rescue the bankrupt New York City in the later 1970s. Grander versions of it have received support from sections of the US Democratic Party, the British Social Democrats and influential capitalist magazines like the Economist and
Business Week.
It is quite possible that this kind of relatively liberal corporatism has a future, at least as a short-term experiment. Politically it has already excited the interest of some capitalists
International
• January-April 1983
International Features in the USA. Britain and Europe. Some of them sec it as duplicating some elements of the Japanese economic model. It also overlaps with many aspects of the alternative economic strategies now so common in the labour movement. So it is not impossible that a capitalist-labour alliance could build up in some countries around a modernised version of Roosevelt's
But this Newer Deal would still have to face many of the same cconomic contradictions as the radical Right or Keynesian solutions; and it would also have to be imposed at an obvious cost to workers. How long it could survive before colliding with these obstacles is hard to say. But it should be recalled that. contrary to a widely-held myth, it was almost certainly not the New Deal which rescued US and world capitalism from the Great Depression — but war.
What makes it so difficult for capitalist governments to come up with a set of policies which can simultaneously solve all of their problems?
can Thatcher and Reagan's strategies be politically implemented within the context of
a bourgeois parliamentary democracy?
The answer to that question has two parts. First of all, it is because, as we have seen, the conditions for the successful production and realisation of surplus value are themselves contradictory. For this reason no policies will unambiguously benefit all of the capital class at the same time. At a moment of acute crisis, the reversal of one aspect of economic disequilibrium may exacerbate another. As a result of this the bourgeoisie may be indecisive and erratic in its policy choices. And it may also be divided within itself according to where the balance of self-interest of its particular sections lie. This is why to break out of the stalemate the bourgeoisie requires a strategy which can transcend the special interests of its various sections. Even when a political leadership appears which seems to offer this prospect, however, such as the apparently far-sighted, confident and ruthless governments of Margaret Thatcher and Ronald Reagan a further problem arises: can the strategy be
within the context of a bourgeois
politically implemented
parliamentary democracy?
It is one thing to think of what to do; it is another to have the political power to carry it out in a bourgeois democratic country with trade unions, political freedoms and periodic elections. That is why a host of Reagan's carly planned attacks on entitlements — such as a reduction in the real level of pension and the ketchup proposal - were proposed and then later withdrawn when it became clear that they could not be carried out politically. This is an inevitable problem because, by their very nature, these policies are liable to be unpopular with large sections of the electorate. In the USA major Congressional elections take place every two years. And hardly any government in the advanced countries can expect more than four or five years of life without the need to please some of the electorate.
This difficulty was highlighted by a perceptive remark by Reagan's axe-person, David Stockman, in a notorious interview in Atlantic Monthly in December 1981. The budget, he soberly observed:
*Isn't something you reconstruct each year, The budget is
a sort of rolling history of decisions. All kinds of decisions
made, five, ten, fifteen years ago, are coming back to bite
us unexpectedly. Therefore, in my judgment, it will take
three or four or five years to subdue it. Whether anyone
can maintain the political momentum to fight the beast for
that long I don't know.'
Politically, fighting the beast of public spending means in
reality fighting those interests which benefit from it. Up to now
in Reagan's America the cutbacks have hit the least organised
workers most. If there is no U-turn, then a deeper incision will
strike at more organised interests — in particular the tradeunion movement.
The logic of Thatcherism and Reaganomics requires the destruction of the kind of labour strength and solidarity which can defend jobs in the public sector and state benefits. This real dilemma points to a number of missing ingredients in government policies as they are usually conceived. Just to change state expenditure, taxation and the regulations which govern the activities of capitalism, however radically it is done, may have economically perverse results unless the government also engineers a radical shift in the balance of political power between the different classes and groups. In the main capitalist countries, in spite of the undoubted strength of right-wing governments, they have still to break decisively all the capacity for resistance which built up during the years of the post war boom.
The implications of this is that the danger of authoritarian solutions is growing — not in the sense that there exists any fascist movements on the brink of taking power, but because the objective difficulties of resolving the crisis in a way which satisfies the needs of capital and wins elections can be expected 10
drive more and more of the bourgeoisie towards authoritarian non-parliamentary solutions. Already in most of the major capitalist countries, as well as most of the backward ones, the crisis is resulting in the most intense attack on many democratic rights which has been seen since the second world war. Like Norman Tebbit in Britain, many Ministers of Labour are engaged in piloting anti-union legislation through their respective parliaments.
These are the same difficulties which are leading many of the major capitalist leaders at present to espouse militantly reactionary ideologies and policies on many questions other than the class struggle. Militarism, patriotism, racism and sexism are all in this way growing like maggots in the rotting flesh of capitalism.
Politics and cconomics are as hard to forecast as the weather. What seems to be the most probable expectation to emerge from this analysis? First, that as long as the bourgeoisic maintains the reins of political power in the major capitalist countries, its governments will tend to move towards the right. But, second, they will still be forced to make periodic major concessions in order to survive politically in the context of parliamentary democracy. And third, alongside these governmovements will continue to grow.
ments, ultra-right wing
Major clashes with workers' organisations can be expected to continue.
But in the immediate future we do not seem to be approaching the apocalyptic and historically decisive clash which will resolve the present crisis. Capitalism is heading neither straight towards the resolution of its crisis on the terms of the bourgeoisie, nor towards any final collapse. For some years to come it seems destined to continue in a state of deep and unresolved crisis, whose manifestation may change again as it has up to now.
This, however, is not a prophecy: it is a statement of what seems most likely on the basis of certain assumptions. There are other possibilities, specially if one major capitalist country
breaks ranks with the others and attempts a markedly different road to the resolution of the crisis.
But if the bourgeoisic seems incapable of carrying through
its own "final solution" to the crisis — one which would involve
untold further suffering for humanity — we must ask what are
the possibilities of the crisis being resolved by a radical solution
of the left, by a decisive move in the direction of socialism?
BOB SUTCLIFFE teaches economics at Kingston Polytechnic.
He is co-author, with Andrew Glyn, of British Capitalism,
Workers and the Profits Squeeze. He regularly contributes to
Socialist Organiser.