Covid-19: What do Rishi Sunak’s economic measures represent?
Last week, Tory Chancellor Rishi Sunak announced a raft of economic measures related to the Covid-19 pandemic. These included guaranteeing 80 per cent of wages for some workers for an initial 12 week period, breaks on mortgage payments and business rates, deferring VAT payments and more. Sunak said that he will do “Whatever it takes.”
A growing number of capitalist governments are looking at taking similar measures in response to the crisis and we need to be able to understand what it represents.
The scale of this government intervention speaks to the huge economic crisis that we are now entering which threatens to dwarf that of the 2008 financial crash (for a detailed Marxist analysis of the situation read this article on the ISA website). The figures for job losses are astounding. At the time of writing 340,000 have been laid off in Ireland, 400,000 in Belgium, 1 in 4 US workers have lost their jobs or had their hours reduced. As each day passes retail outlets announce closures across the country, with some stores only guaranteeing their staff wages until the end of March, for example the Arcadia chain which owns Topshop and Dorothy Perkins, amongst others.
Nandos, Costas, McDonalds and most food outlets have also closed down as a result of Johnson’s decision to close pubs and restaurants.
A Financial Times article from 18 March explained how ‘millions’ of jobs could be at risk, with a quarter of the workforce employed in sectors where demand has shrunk due to the pandemic.
It is not just retail. The transport industry has taken a large hit. Easyjet have scandalously asked for a government bailout despite being highly profitable and attacking the terms and conditions of their workers. Flybe stopped trading several weeks ago with at least 2000 job losses.
The government has stepped in and suspended the rail franchise agreements due to slumps in passenger numbers to stop the private companies collapsing.
The increased state intervention into the economy has raised questions over what these measures in the UK and around the world mean. Indeed the Daily Telegraph has run with articles titled ‘Boris must embrace socialism immediately to save the liberal free market’ and ‘There is no alternative: we are all socialists now in the fight against coronavirus.’ The head of the OECD Angel Gurria has said there needs to be something on the scale of the Marshall Plan to mitigate the economic damage.
But are the measures being proposed ‘socialist’, and why are they being carried out?
This crisis underlines the fact that left to its own devices the free market can not provide the basics for ordinary people. This is true in ‘normal’ times but is especially so now. The scale of the packages being announced has smashed capitalist orthodoxy – that the market knows best. The capitalist class are highly concerned about their system and the impact Covid-19 is having, and will do anything to defend it. That is what Sunak means when he says he will do “whatever it takes.” Governments around the world are adopting increasingly interventionist policies including some nationalisations and bailouts in order to defend capitalism – and by trying to appear to mitigate the worst aspects of the crisis in an attempt to stave off mass anger and revolt.
Does investment equal socialism?
Socialists favour more investment in public services, and of course any measures that help working class people, particularly in times of economic crisis. However we need to be crystal clear about who is carrying out these policies, and importantly, why. To a large extent, whether capitalism is operating on a more free market basis, or with more government intervention, is a tactical issue for the capitalist class depending on the concrete circumstances. The Tories are not taking these measures because they are moving in a ‘socialist’ direction or have genuine concerns for working class people.
In 2008, governments across the world “stepped in” to the economy, nationalising large parts of the financial system and investing colossal sums of money. This investment is still going on, with the US Federal Reserve (their equivalent of the Bank of England) investing trillions of dollars in recent weeks. And yet all of this was done to benefit big business, who gained enormously from this “socialism for the rich”. A colossal bill was presented to working people and the young and the poor in austerity measures which continue ever since, and are still continuing with the Tories’ attacks on social care provision hidden in their so-called radical set of measures.
With a much bigger crisis looming now than in 2008, governments are stepping in further, and will intend to present working-class and middle-class people with an even bigger bill than they did a decade or so ago. Already in the US and China, governments which have never ceased attacking workers and the poor were introducing more measures of state control as part of the trade war and geopolitical conflict between the elites of both countries. This twin-track process, of drift towards some greater state control in the interests of the majority of big business while austerity attacks continue, is being accelerated by the Covid crisis and the economic downturn which it has partially triggered.
The speed with which the Chinese regime built hospitals in Wuhan has grabbed popular imagination in the West, where hospitals are more likely to be shut down than opened up. But as our co-thinkers have explained, the building work was done in horrendous working conditions by construction workers, and the number of beds supposedly provided in these hospitals falls well short of what is needed. The semi-socialist rhetoric of the Chinese regime is designed to cover up the reality that it rules, just like Trump, Johnson and so on, in the interests of the billionaires not the people. Even on occasions where it claims to act for the people, the limits of state action under capitalism by governments beholden to the capitalist class quickly become apparent.
For socialists, we need to set our sights much higher and to have the aim of ending capitalist exploitation. At certain junctures, either to stave off economic crisis or under pressure of mass working class movements and even revolution, capitalism can be forced to concede more wealth and resources to the working class. However, our goal as socialists is not just to get a greater share of the wealth or greater investment. We have to raise that distribution of wealth is directly linked to the question of who owns the commanding heights of the economy, and on what basis is production for. As Marx said in his Critique of the Gotha Programme written in 1875, but still very relevant today
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one.”
Break with capitalism – we need socialist planning
The above words from Marx are very applicable for the current situation. We need a break with capitalism, a system which is based on the private ownership of the means of production. We need genuine socialist planning – where the vast economic resources are used for the benefit of the majority and are under democratic public ownership and control. Sunak, Johnson and their ilk are trying to save capitalism. It is time we built a movement to bury it, one which can lay the basis for socialism. In such a socialist system – public health can and will be put before private profit, for the benefit of humanity.
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