My, my…how times have changed. For thirty years the free market could do no wrong, then suddenly all change and it’s state intervention that’s now the one true faith. Even our own steadfast leader, Mr Brown, has undergone a St Paul-like conversion. Now Mr Prudence is to be found strutting his Keynesian stuff all over the world stage, championing the idea of state intervention on a grand scale. How easy our politicians glide from one set of principles to another, hardly pausing to adjust their moral compasses.
As for the social democratic left, they truly feel their time has come. The Guardian is now stuffed with articles paying homage to the new god that is Keynesian economics. The new social democratic dawn is upon us and a land of egalitarian milk and honey beckons. The dark days of New Labour have now passed and the next election will see the state interventionist forces of good do battle against the dwindling power of the evil free market Tories.
But what are the rest of us, back here on planet Earth, to make of it all? Are the right wing free marketeers finished? Well, not so fast. Those of us not so carried away with the results of the US elections should pause for thought before proclaiming the New Jerusalem. We should not be fooled into thinking that Keynesian economics is somehow “left wing”. The whole Keynesian project was, after all, designed to save capitalism from its own destructive nature. Its aim never was, and never will be, to undermine the capitalist system. Quite the contrary.
The over excited liberal left would have it that the current state spending spree is aimed at eliminating poverty rather than saving capitalism. It’s as if the very same Labour leadership, which was quite relaxed about the filthy rich and about growing inequality, has now suddenly found its social conscience. This is nonsense. Labour doesn’t give a toss about the poor. Since 1997 they have allowed millions to languish in grinding poverty and did nothing. All we heard off them for a decade was the same old mantra that there is no alternative. It is only when capitalism is threatened that suddenly billions are conjured up from nowhere to save the whole system from going down the toilet.
So let’s not be fooled by all the crap that we are somehow witnessing the end of the Thatcherite free market era. All that is going on is a change of tactics. The British state is not in the business of dismantling the free market at the expense of the rich and in favour of the poor. The state is not spending billions of our money to undermine the free market but rather to save it. Yes, this may involve channelling money to the less well off but this has little to do with concerns about poverty. It is part of a wider strategy aimed at boosting demand as quickly as possible during the current crisis.
saving the system
The role of the social democratic state is to support capitalism. The individual capitalist may look no further than how much profit there is to be made. The state, however, has to look at the system as a whole and how best to protect it. This may involve temporarily limiting profit in order to save the system from itself. That is the role played by Keynesian economics. When capitalism drops itself in the shit, the state intervenes by pouring in money and imposing greater regulation. Once the danger is past then market forces are let off the leash until the next crisis hits.
That is what Labour is up to now. It has nothing to do with creating a more egalitarian society. The very idea is laughable. Labour has already made it clear that once capitalism has been pulled out of the crap the current spending spree will come to an end and market forces will once again rule. State spending will be reined in and cuts to services imposed. It is then that the current spending will all have to be paid for. And it will not be the rich that’s doing the paying. Taxes will increase for the majority, while the rich get off scot free. That is why such eminent socialist bodies as the CBI and the Institute of Directors are backing the massive increase in public spending. They know full well that once the crisis has passed it will be back to the business of making vast profits as usual.
That is not to say that at the other side of the crisis things are going to look exactly the same. We may see far greater regulation of the financial sector. However, we should not be conned into thinking that this somehow represents the forces of progress limiting the power of capitalism to exploit. Far from it; it is the power of the state limiting one sector of capitalism to protect the system as a whole. This is in full keeping with the state’s role under capitalism. The state is there to look beyond short term profit and individual capitalist interests, to intervene when necessary in order to support, shape and protect capitalism as a system.
What happens next is hard to determine. It all depends on whether the measures currently being taken to bail out capitalism work or fail with the economy sinking into depression. What we can say with certainty is that the future well being of the working class does not lie in the state intervening on our behalf. The social democratic left dreams of a world in which the paternalistic state intervenes against capitalism in the interests of the working class…let them dream on. As workers we should ignore such fantasies and concentrate on organising and confronting both capitalism and its partner in crime, the capitalist state.