This is a short piece I was asked to write for an “Economy Round Table” for the New Left Project website
Isn’t it ironic that behind the consensus on the need for public sector cuts is the idea that public services are parasitic on the ‘real economy’, when the global crisis has resulted from the very real parasitism of the financial sector. The globalisation of the finance markets created a situation where instead of finance providing money for investment in the economy (for producing commodities or services) the economy was subordinated to the interests of finance. The rapid growth of private equity was a good example, with acquisitions based on loading up companies with massive unsustainable debts, but making big bucks for a few individuals very quickly. Making money from money or from fictitious capital was so much easier than making it from traditional economic activity, with profit margins much higher.
After the ‘credit-crunch’ it’s commonplace to talk about the need to ‘re-balance’ the economy. But you would have to start by separating investment from retail banking, and banning ‘securitisation’ of assets such as mortgages, which precipitated the crash. The “financial weapons of mass destruction” should be decommissioned.
Of course, socialists aren’t in favour of waste. There’s plenty of scope for cutting out real waste. For example, ending the expensive ‘health market’ which has steeply increased the cost of administration necessary to police it; saving the cost of paying private health providers for work they haven’t done (whilst NHS trusts are penalised for doing ‘too much’ work!); ending public sector support for the profits of the privatised rail companies.
The reshaping of economic activity requires the eradication of some jobs and the creation of new ones. Trades Unions cannot ignore the consequences of the work that their members do. They should not defend all jobs regardless of their social and environmental consequences. The support of some of the unions for nuclear new build and renewal of Trident, for instance, means supporting the waste of resources which could otherwise be put to more socially useful purposes. Obviously they would have to campaign for alternative jobs to replace those that were lost. This is a debate which cannot be dodged.
The government’s idea of ‘efficiency’ is to sack 25,000 HMRC staff so that there are insufficient staff to collect unpaid tax. According to the government estimate there is £28 billion unpaid. The HMRC estimates that up to £40 billion a year more should be paid than is. Richard Murphy estimates that up to £70 billion is lost by tax avoidance.
The trades unions have a real job on their hands if they are to defend public services. But they won’t be able to do that unless they have an alternative perspective directed at driving out the profit motive and business methods which have been introduced. ‘Efficiency’ should be measured according to social and environmental needs.
‘Regulation’ will not do. We have seen how it has failed in relation to the privatised utilities and the railways. It is time to push back the boundaries of ‘the market’ and take steps towards social ownership and production for human needs. All talk of ‘re-balancing the economy’ is meaningless if market mechanisms are relied upon.