Doing capitalism differently?

Professor Mariana Mazzucato is a heterodox economist at the UCL some way from Marxism but she shares with Marxists recognition of the importance of “value” in economic analysis. In neoclassical economics, the kind they currently teach in universities, a marginalist approach is adopted and value is synonymous with markets and market prices. For Marxists, value is the labour time consumed in producing a commodity, whether directly or through the consumption of other commodities in its manufacture.

Professor Mazzucato argues in an article in the Guardian today that neoclassical economics goes a long way to explaining the mess the world finds itself in today and the Covid-19 pandemic will provide an opportunity to abandon it and do capitalism differently . Since the 1980’s, she argues, it has resulted in: weakened institutions like the NHS that are needed to respond to crises; a loss of confidence in what governments can achieve; the destruction of the social safety net; and growing inequality.

There was, however, no golden age prior to the 1980s, just a brief period after the War when the mere existence of the USSR required western capitalists to treat their workers a little better.

Professor Mazzucato believes capitalism can be reformed provided governments

• invest in and, if necessary, create institutions to prevent and manage future crises.
• co-ordinate research and development, steering them to “public health goals”.
• structure public-private partnerships to ensure “both citizens and the economy benefit”.
• attach conditions to bail outs of private business to ensure that the firms we save with public money become part of a new economy delivering lower carbon emissions and “investing in workers”.

A version of “soft capitalism” that incorporated these features would certainly be a great improvement on the current version, but it ain’t gonna happen. Capitalism is a system whose sole purpose is the accumulation of capital. Until it is itself overturned, all obstacles that impede this accumulation will be swept away. When the current crisis is over, public institutions like the NHS that restrict capital accumulation will continue to be under-funded and undermined; private sector R&D will continue to be driven by profit, not social need; public-private partnerships will continue to rip off workers; and, while there are still hydrocarbons left in the ground that can be extracted and burnt at a profit, CO2 levels will continue to rise. This is how capitalism works. The only solution is a social revolution that ends it.

The Coronavirus Pandemic: a view from Croydon

The coronavirus pandemic and its social consequences are moving so quickly that anything we write today is likely to be rendered obsolete tomorrow, especially when it is written from the narrow perspective and vantage point of Croydon and its local Communist Party branch. Nevertheless, here are a dozen recommendations that we might have been discussing at our AGM on Thursday had it not been postponed.

1. A government of national unity. It is unacceptable that someone as unsuitable, untrustworthy and clearly as out of his depth as the Fat Controller should be heading up a Tory government at a time of national crisis.

2. Full disclosure of the government’s modelling of the epidemic in England, Scotland and Wales so that it can be scrutinised by the wider medical and academic community. Remember how wrong were the government’s narrow pool of medical advisers over mad cow disease?

3. More comprehensive reporting and publication of the numbers of infections and deaths at the local level.

4. Responsibility for managing the epidemic in Northern Ireland to be transferred to the Republic. A single, unified strategy is called for in the island of Ireland. Covid-19 does not respect borders, least of all ones as porous at that between the North and the South of Ireland.

5. Compulsory requisitioning of private hospitals. It is simply unacceptable that the government should be further subsidising these parasitic institutions by hiring their facilities at commercial prices.

6. Nationalisation without compensation of UK retail banks, i.e. those behind the ring fence set up following the Vickers report, before they fail.  They should then be supervised by the Bank of England, which itself should be brought completely under government control. We must learn from the mistakes in the 2007-8 bail out of banks and not use public funds to protect bank shareholders and their over-paid senior management while leaving their customers to suffer. We can then ensure that banks support socially useful activities rather than prioritise building up their own reserves as they did following the 2008 financial crisis. If necessary, relevant parts of UK industry should also be taken over to preclude profiteering, co-ordinate manufacture of respiratory equipment and promote not-for-profit vaccine research and distribution.

7. The homeless should be taken off the streets immediately and properly housed. The acquisition of vacant properties and second homes could be undertaken to facilitate this.

8. Food banks should be run down as quickly as practicable and replaced with adequate levels of social payments. To this end, Universal Credit should be immediately transformed into a more generous and less restrictive system and workers on zero hours contracts and others in the gig economy brought within its ambit.

9. The government should disregard the bleating from Richard Branson and other UK airlines to bail them out. If they are failing, they should be put into administration and their fleets mothballed. The opportunity this would provide to formally abandon Heathrow expansion should be taken.

10. The wealth of UK citizens held abroad in tax havens should be re-patriated and further flight of capital abroad halted by the immediate imposition of capital controls. A comprehensive wealth tax should be imposed to help finance the crisis.

11. Evictions and mortgage foreclose on individual’s primary homes should be made illegal.

12. A mandatory role for trade unions in every workplace. This would ensure that exposure to infection by employees is related to social need and is fairly distributed. Employers cannot be trusted to carrry this out unchecked.

This list of recommendations isn’t comprehensive; nor does it necessarily represent current, official CP policy. In essence, a social revolution is called for – and that is CP policy. These recommendations are how we view things from Croydon. If you agree or disagree with any or all of them, let us know.