Some people might object to the view expressed in the previous post that the Tories are intent on even more drastic austerity – after all hasn’t the new Chancellor scrapped the target for achieving a budget surplus by 2020? And as one Tory official is reported to have said – “perhaps only a Tory government can save capitalism from itself.”
And hasn’t Theresa May gone even further than this? Hasn’t she said she will make capitalism fairer for workers, crack down on corporate greed, promote state intervention, provide for more workers’ rights and put “the power of government squarely at the service of ordinary working-class people.” Hasn’t she criticised uncaring bosses, tax-avoiding multinationals and directors who took out “massive dividends while knowing the company pension is about to go bust”?
Yes of course, she has gone further, but none of these steps are necessary for a Tory government “to save capitalism from itself” and the chances of a Tory government putting “the power of government squarely at the service of ordinary working-class people” is zero. So what is going on? Is it just a case of ideology being employed, not to unconsciously blind the beholder, but consciously to blind those naive enough to believe Tory lies?
Before I answer this it is useful to make two observations. First, the language of the Tories shows how bankrupt the anti-Corbyn forces in the Labour Party are – afraid to mention class while the Tories outflank them from the left. Just how much of a future would the Labour Party have if it stood permanently exposed on the left by a Thatcher Mark II? What future would it have to endlessly repeat an approach symbolised by allowing cuts to disability benefits to go through only for the Tories to then scrap them? Would the Labour right have wanted to abstain on scrapping them as well?
The second point is that this Tory rhetoric is described, by the same political commentators who got Brexit wrong, as the Tories moving against the Labour Party by ‘moving to the centre ground’. This is almost as funny as their voting for Cameron while opposing Brexit. Since when did promoting workers’ rights and cracking down on corporate greed, even if only verbally, been the centre ground – surely this is moving to the left?
And to answer the question – of course it’s moving to the left, and its only became the centre ground since Jeremy Corbyn arrived from Mars to become leader of that part of the British people regarded as swivel-eyed-mad-lefties by the media. But of course it is also claimed he leads an ineffective opposition – despite him causing the ‘centre ground’ to shift leftwards.
It’s difficult to know whether this ridiculous view of the Tories’ approach is unconscious ideological self-deception – that the political battle is always fought on the centre ground – without pausing to think just where this ground might be; but I tend to think that it’s more likely to be cover for the fact that the political commentators who write such rubbish know that it’s all Tory rhetoric without any chance of being implemented. If the Tories have moderated austerity it is only because they fear they have to because, as we have seen, a Tory government is necessary “to save capitalism from itself”, or rather a new Tory government is necessary to save the country from the last Tory government. But then, even the last Tory government carefully implemented austerity and extolled its virtues only to ensure it could continue as a political weapon and as an economic policy option that fitted an ideological agenda. They were well aware, or at least some of them were, of the limits of a policy that involved bleeding the patient to death.
The case for this new Tory tilt to the left being a conscious attempt to blind those naive enough to believe Tory lies is supported for two reasons. First, a ‘sovereign’ UK outside the EU will slip down the global power rankings like a stone. It will be too big to ignore but too small to decisively shift its environment to its benefit. The EU cannot afford to indulge its delusions of greatness because it’s big enough to matter but not big enough to influence the EU to submit to its claims or demands. Some Tories might believe it can trade with the rest of the world while turning its back on those next door – that it already has almost half its trade with – but it requires outside investment to pay its way and this can only come through modelling itself as an attractive centre for foreign investment.
To do this will not entail the reassertion of British sovereignty but will expose its weakness and expose its lack of sovereignty. The inability of relatively small and even medium sized states to interact in the world mainly to their benefit is precisely why larger economic blocs like the EU were formed. The world will not change its rules because the British don’t like them. The British state will therefore become weaker with less capacity to intervene and the economy it has to intervene into will be even more in need of assistance.
to be continued
Back to part 1
Forward to part 3
Sráid Marx 
May’s government is having to abandon austerity and look towards fiscal expansion, for the same reason that other governments are having to do the same. Monetarism used to pump up liquidity was used to boost the realised rate of profit, allowing companies to raise prices, whilst a weakened working-class was unable to raise wages to compensate, and instead had to pawn the assets – mostly owner-occupied housing – it had built up after WWII, by increasingly borrowing against them. Hence global household indebtedness rose to record levels.
From 1987 onwards, it also protected the owners of fictitious capital from collapses in their nominal wealth, as bond, share and property market bubbles serially burst, only to be reflated by yet more monetary stimulus. Anyone who thinks that this monetary intervention over the last thirty years, and particularly the last ten years has been about trying to stimulate the economy, has missed the point. It was designed solely to protect the fictitious wealth of the top 0.001%, whose private wealth is today held almost exclusively in the form of this fictitious capital, of shares, bonds, property and various derivatives of them.
They hoped they could do that for long enough for the real economy to grow, and provide the basis for a further expansion and from it, a further growth of surplus value, and the revenues that the top 0.001% derive as rents and interest. But, the very process of monetary expansion to protect and inflate that paper wealth undermined real capital accumulation and growth, as it increasingly sucked potential money-capital into speculation, in search of capital gain, and encouraged the use of those paper capital gains to cover revenue expenses, rather than growing revenue itself. In short in area after area, it undermined the real capital base in order to protect the fictitious capital value.
That process has reached its end point, as the world is awash in liquidity, yields on all asset classes have reached zero and below, and yet in the real economy, market rates of interest have increased, and become ever more volatile. We have 4000% p.a. rates of interest from pay day lenders, small companies unable to obtain money-capital, and as “Newsnight” showed recently, being deliberately asset stripped by state owned UK banks to keep those banks afloat.
There is nothing particularly “left”, or even “centre-ground” about governments having to utilise fiscal expansion, when monetary intervention has reached the end of the road, and become destabilising for the owners of money-capital themselves. Marx points out that an important means of primary capital accumulation, was the huge budget deficits that the UK ran in the early 18th century – rising to around 250% of GDP; Harold MacMillan developed the ideas about an interventionist or entrepreneurial state, in the 1930’s, and Neville Chamberlain had developed the basis for the Welfare State in the 1920’s and so on.
And, of course, one of the most decisive examples of the use of such fiscal stimulus and state intervention for economic management and regulation came from Hitler in 1930’s Germany, who borrowed the ideas of the Strasserites. Hardly a left, or centre-ground government!
The objective material conditions are driven by the fact that capitalism has reached the stage of socialised industrial capital. It is this socialised industrial capital that drives the economy, that provides the surplus value, and whose interests, therefore, ultimately dominate. Its optimum political expression is social-democracy, which is why even conservative governments – representing the interests of fictitious capital – are forced ultimately to adopt economic measures that reflect the needs of that big socialised industrial capital. But, the very fact that it is conservative governments that are forced to adopt such measures results in them falling subject to all manner of contradictions, because the class interests they serve politically are those of the owners of that fictitious capital, the owners of shares and bonds, i.e. the financial oligarchy, and of the owners of large scale landed property, i.e. the landed oligarchy. But, the interests of these two social classes are antagonistic to the interests of big socialised industrial capital. The greatest example of the break out of those contradictions faced by conservative forces is that of fascism, and we are seeing a mild form of it, in the recent rantings of May’s government, its desire to remove even the potential for democratic control over its action in regard to Brexit and so on, and its attempts to divert attention on to hostility against foreigners.
You are right, the matter is heightened in the UK, by Brexit, for the reasons you state. Britain is too big for the EU to ignore, to small to be an independent economic, political and military power. It is set, were Brexit to ever happen – and I still think its not a done deal yet – to go into a rapid spiral of decline. The outbreak of Marmite Wars, is a first indication, as TESCO’s shelves empty because Unilever, no doubt to be followed by other large foreign suppliers, refuse to pay the price of BRexit, and the falling Pound, and require UK consumers to pay the new much higher prices for imported products. As Unilever state deflating the British nationalist bubble, the UK accounts for only 5% of their global sales.
But, its not just foreign sellers of goods that will demand that the UK consumer stump up the cost of Brexit by paying higher prices. The Brexiteers have trumpeted the rise in the UK stock market, but in dollar terms, the UK stock market has been the worst in the world over the last year. If you invested $1.5 million in UK shares at the start of the year (about £1 million), you might have received a 10% total return, in Pounds, on those shares, but the £1.1 million you thereby obtained would now convert to just around $1.3 million meaning you would have lost $200,000!
The situation is worse with government bonds. The yield on UK Gilts is next to zero. If you were a US, Japanese or other global investor, the $1 million you paid into buying UK bonds, at the start of the year, would today be worth as little as $700,000. Given that the UK has a massive and growing trade deficit, and that deficit is growing wider, as it still requires imports from companies like Unilever, as well as large amounts of foreign produced energy etc, and the sterling price of those imports is rising by around 30% and more as the Pound drops, as a country it is dependent upon the kindness of strangers, who provide it with the loans to sustain this consumption.
Why on Earth, as a foreigner would you want to buy UK bonds (commercial or sovereign) given that you know that almost whatever rate of interest you could get on them, it will be wiped out by the currency depreciation of the value of the bond in coming months?!
Britain is about to experience a serious crisis, as a result of the proposals for Brexit – one reason I think it will still never happen – but it is in preparation for that that May’s government is becoming increasingly authoritarian, and why it is becoming increasingly xenophobic, so as to be able to divert the wrath on to others rather than on to those who are to blame for its current plight.