Britain: What has socialism got to do with fighting the cuts?

How to fight austerity and capitalism

Each week members of the Socialist Party (CWI in England & Wales) sell copies of the Socialist newspaper at workplaces, colleges, stations, town centres and working class estates all over England and Wales, as well as at protests and meetings. Sellers are often questioned about socialist ideas. Here Tom Pearse records such a discussion.

Socialist seller (S): Fight the cuts – no ifs, no buts, fight all cuts!

Potential buyer (B): Ok, I’m against the cuts but what is the alternative? The government says there is a massive public sector deficit and, if we don’t cut it, then it will grow to unacceptable levels. Then the country will go bankrupt.

S: Well, the first thing I’d say is that we, the working people, who are the majority in this country, didn’t create this deficit. The rich and their system of capitalism, particularly the bankers, are mainly responsible for this deficit. The previous government stepped in and bailed them out to the tune of about £80 billion directly, with up to £1 trillion in loan guarantees etc.

Also, because of the crisis of capitalism – which again we didn’t create – over 2.5 million people in Britain don’t have a job – including a million young people between the ages of 16 and 24.

It’s the largesse handed out to the bankers and the increased cost to the state in unemployment and other benefits which accounts for most of the deficit.

B: Yes, yes – but this deficit exists. How are we going to pay for it? How can we ultimately eliminate it?

S: Did you know that the total deficit could be wiped out if the rich paid taxes like ordinary people do? Tax avoidance by the rich, according to the PCS civil service union, comes to £120 billion a year, which is almost equal to the total government budget deficit, £143 billion, to be eliminated over four years.

But the Con-Dems are using this situation to pursue a scorched earth policy against all the historical achievements of working class people, the NHS, pay and conditions etc.

This represents an attempt to turn back the wheel of history to the 1930s and in some senses to the 19th century. Working class people are being made to pay for rescuing capitalism in a severe crisis.

B: But if we try to make the rich pay for the deficit, won’t they just take their money out of the country?

S: Yes, they might attempt that. But then they would be openly acting selfishly by seeking to flout the democratic wishes of the majority of the British people. We would therefore have every right to introduce measures to prevent them from doing so.

B: But isn’t that to attack the principle of private property?

S: When socialists talk about ’private property’ we’re not talking about the personal possessions of ordinary people – houses, cars, fridges, etc. The private property of the rich and the super-rich comes through the super-exploitation of us, working class people.

They would argue that their profit, which is what Karl Marx called "the unpaid labour of the working class", is necessary in order to keep the system going. We should never forget that profit is achieved by exploitation – sometimes ruthlessly so in China and elsewhere today – of the labour power of the working class.

B: Don’t we need rich people to create jobs and anyway, doesn’t competition drive invention?

S: There is a grain of truth in the arguments of the bosses. In the past, by investing this surplus – profits if you like – in industry, they played a role in developing society, providing jobs and increased wealth for a time.

But for the last 20 to 30 years investment in factories, in what we would call the ’means of production’ – the organisation of labour, science and technique – and the actual making of real things, has dropped dramatically.

Instead they sought to boost their profits in a massive orgy of ’financialisation’, the building up of the financial sector at the expense of real production and the creation of jobs. This created a massive financial bubble which has now burst, resulting in the present devastating crisis.

This is a real indictment of the failure of capitalism. The International Monetary Fund has calculated that during this economic crisis, in 2008 alone, the total loss in assets devalued worldwide came to $50 trillion – roughly equal to the value of one year’s global output of goods and services! This wealth is being destroyed because capitalism is a system based on production for profit for the few and not the social need of the many.

B: OK, the capitalists failed. But you still haven’t said how you would stop them from avoiding any attacks on their wealth.

S: If they tried to continue with evasion, if they tried to take their loot out of the country, then a radical socialist government should introduce state controls of all capital coming in and out of the country.

This would be accompanied by the ’opening of the books’. The accounts of all companies should be inspected by mass committees of workers and consumers. This would be a form of workers’ control, which is vital as a means of revealing the real wealth and how it is to be controlled for the benefit of the majority.

B: How can you do this in an open and free economy?

S: By nationalising the banks and finance houses.

B: Didn’t the British government try this at the beginning of the financial crisis when they took big stakes in the banks?

S: Up to a point yes. But it was not complete nationalisation. And it certainly wasn’t carried out in a way that was beneficial to the majority of the people of this country. New Labour left control in the hands of big business managers.

Even when the banks are nominally under our control – that is the state – they are run by and in the interests of the capitalists. Look at the tops of the majority-nationalised RBS bank – they are paying out millions in bonuses to themselves!

Instead we want real democratic nationalisation, conducted in a socialist manner through workers’ control and management. This would involve the workers in the banking and financial sector, together with representatives of workers in general and government representatives, as well as depositors and other users, controlling and managing the banks on behalf of the people as a whole, providing cheap loans, mortgages, etc.

B: Won’t big business take fright and sabotage any efforts to rein them in?

S: It is entirely possible that this could happen or be threatened. In the past, when minimal measures were taken against them, the capitalists threatened a strike of capital. When the Labour government in the 1970s – led by Harold Wilson as prime minister – introduced a tax on capital, big business, with the help of the newspapers, conducted a ferocious struggle which resulted in 174 amendments to the bill, and effectively nullified the proposed tax increases against the rich.

B. Well there we go. You can’t do anything.

S: Now, I didn’t say that. If we, the Socialist Party, have majority support, we could do a great deal to counter the undemocratic defiance by a handful of capitalists, seeking to thwart the wishes of the majority.

Harold Wilson and the Labour government, because they would not go outside the framework of capitalism, bent the knee to the bosses’ pressure and capitulated. We would have called their bluff and proposed to Parliament a bill to take over these big companies who were threatening to defy and blackmail the elected representatives of the people.

B: But again, would that not mean violating the age-old principles of private property?

S: To invoke this alleged ’principle’ is a smokescreen to mask the colossal and undemocratic concentration of power in the hands of a handful of the rich.

A few figures to illustrate this: of the hundred largest economies in the world 52 are corporations and 48 are countries; the top 500 companies control 70% of world trade; the top 200 companies’ combined sales are equal to 28% of world GDP but employ only 0.82% of the world’s workforce.

In the US, 2% of companies account for almost 75% of business activity. Here in Britain, the Socialist Party points out that 150 companies control 70-75% of the wealth of this country.

In other words a handful of billionaires control what are, in effect, monopoly concerns, which determine what will and will not be produced. They control who will and who will not work, which party they would like to see elected in which government to best represent their interests.

We do not live in a real democracy. Capitalist democracy is where everybody, at least in theory, can say what they like so long as big business, a handful of monopoly companies, can decide what takes place in practice.

B: But how can you break the power of the rich and the big monopolies?

S: That’s a very good question. We will propose that these companies be taken over – nationalised by a socialist government which would then organise a democratic socialist plan of production. This plan would be drawn up through the involvement of working class people, representatives of the middle class, such as small shopkeepers, small businesses etc, the users and customers of industry, etc.

B: Two questions spring to mind. Wouldn’t nationalisation be, in effect, ’expropriation’ of the assets of people who, through diligent work, have built up this wealth over generations?

Secondly, if you take over industry, don’t you also ’nationalise’ the savings of many, not necessarily wealthy, people who invested in stocks and shares – for instance trade union members who have their pensions invested on the stock exchange?

S: Firstly this wealth and power of big business has been built up, as we showed earlier, by the exploitation of the labour power of the working class.

In the past there was some justification for this – despite the horrors of capitalism in the Industrial Revolution, the slave trade, etc. This was because it built up industry and was therefore ultimately laying the basis for abolishing shortages and boosting living standards.

But capitalism is a system which cannot fully utilise the full potential of the productive forces, as has been shown by the series of crises throughout its history and particularly the present crisis. Karl Marx pointed out that when it begins to hold back production, to destroy wealth, capitalism betrays its "historical mission", which was to develop production.

When it begins to hold back production it becomes obsolete. This does not mean, however, that capitalism will ’automatically’ disappear. It needs to be ’helped’ off the stage of history by the actions of the working class and the labour movement. So we need a new social system – one that involves a state acting for the majority and not the privileged minority – which is democratic at every level both in the running of industry and society.

But we, that is the working class and the labour movement, are not impervious to the interests of the small investors. Even to the big investors we will be more generous than they are to the poor, those on benefits, etc. Compensation will be paid on the basis of proven need to all whose assets are being taken over by a democratic socialist workers’ state.

B: And the ordinary people?

S: It goes without saying that, of course, trade union members and their pensions will be safeguarded; in fact, pensions will be rapidly increased from the current miserable level which the coalition government intends to cut further. All workers – as well as the unemployed, those on low wages, pensioners etc – will enormously benefit from a socialist planned economy.

B: How can you possibly guarantee that, by waving some kind of magical ’socialist’ wand, things will improve in the way you describe?

S: There will be no hocus-pocus; there is no mystery in how a socialist planned economy would be organised and will be superior to outmoded capitalism.

Capitalism is a system which cannot utilise the full productive potential of its own system. The output of the world economy is back to the levels of 1989.

But in the 17 countries forming the eurozone, joblessness among the young now officially stands at over 20% (although it’s much higher in many areas) alongside closed factories.

In Ireland we have the phenomena of empty ’ghost estates’ while millions throughout the world lack basic shelter. One billion people on the planet go to bed hungry every night, an increase of 150 million compared to 15 years ago.

A planned economy would use all the resources which now lie idle, as well as cutting out the colossal waste from unnecessary advertising, duplication of production, etc.

Instead of the measly growth rate of capitalist economies at present – with Britain not really growing at all – a socialist planned economy could rapidly increase production on an environmentally sustainable basis and generate huge extra resources in Europe and the world.

It would increase the participation of the workforce in running society, including production, as well as consumers – through cutting the working day without any loss in pay. This would not lead to a decrease in production but give an enormous boost to it. In schools, in housing, in education, instead of the current cuts, there would be a big expansion. Undreamed of plenty is possible on the basis of socialism.

B: But didn’t ’socialism’ fail in Russia? Instead of democracy there was dictatorship by people like Stalin.

S: The Russian revolution, in the period immediately after 1917, when the October revolution took place, established the most democratic state in history. It proceeded to take into public ownership the land, industry and finance.

For the first time the majority – that is the working class and the poor peasantry – were in power. They ruled through a system of workers’ and peasants’ councils.

There were no privileges for the representatives of the people, who lived on the average wage, were subject to recall, etc. These councils, for the first time in history, raised the working class to power and allowed them to rule.

The Russian revolution was seen as just the beginning of the European and the world revolution. Unfortunately, despite favourable opportunities, this did not transpire because of the betrayal of the workers’ leaders in the social democratic parties (like the Labour Party in Britain) in the West at that stage. Therefore Russia was isolated and, on the basis of scarcity, a low cultural level and a privileged elite, the bureaucracy began to emerge, personified by Stalin.

This bureaucratic caste betrayed the ideals of the Russian revolution – although the planned economy was still maintained and therefore the system which remained was still relatively progressive compared to capitalism – and gradually established a one-party totalitarian regime.

B: What guarantee is there that your British version of socialism will not go the same way?

S: This will not happen in a socialist Britain. I know this is a bold assertion but it’s based on a sober assessment of the different conditions between Britain today and Russia at the time of the revolution. We live in an advanced industrial country, with a high level of culture, access to computers, the social media, etc. We have a powerful and educated working class with its own organisations, the trade unions.

Once working people here carry through such a big social change they will not allow a repetition of Stalinism, for power and privilege to be concentrated in a few hands.

B: But won’t those in power just get greedy?

S: Yes, there is always a danger of a bureaucratic layer seeking to control everything. Look at the trade unions today. There are leaderships sometimes on salaries several times that of trade union members. There are leaderships who fear the active participation of the members, particularly militant fighters like members of the Socialist Party fighting to transform the unions so that they reflect the real will of working people.

The only way to check this bureaucracy is through democracy. Trade union and other officials should be elected subject to recall. Such will be the advantages of socialism, particularly implemented democratically, that there would be no possibility of going back to capitalism. This would be as absurd and as utopian as anybody today hoping to return to feudalism, to the hardship of the middle ages.

B: But do you think that the capitalists will just allow you to go ahead and expropriate them without resistance?

S: We will have a democratic majority and under the rules of democracy a minority should abide by the will of the majority. Of course the rights of minorities would be protected. Not just the working class but the intermediate layers of society can be won to socialist system.

Once the mass of working people come together in struggle, a huge social movement, all of those layers of society who are subject to attack by the system, gravitate to the workers’ side. This was shown, after all, in the revolutions in Egypt, Tunisia and throughout the Middle East.

The Con-Dems are attacking the police by proposing to cut their numbers. Even servicemen, on returning from Afghanistan, could be thrown on the dole. Many then can be open to the idea of fighting the cuts. But also this can open up for them the vista of a new society where all the talents can be used.

Nevertheless we are realistic. History has shown that it is not the left, it is not the working class movement, which resorts to force to attain its ends. We are absolutely opposed to the methods of terrorism. But we’re not pacifists; we will defend all democratic rights from any forceful attempt to take them away. We fight with democratic means for a democratic majority. But the ruling class does not always abide by even its own ’rules’ when its vital interests are threatened.

B: Ok, you’ve made the case for a socialist Britain. But what kind of set-up will you have in relations with Europe and the world?

S: We don’t believe in socialism in one country. Russia shows that there is no possibility of any one country moving towards socialism by itself. Leon Trotsky, the great socialist theoretician of the workers’ movement, continually argued against this idea and he was proved right.

The development of the productive forces has completely outgrown the narrow limits of the nation state. The failed attempt of the capitalists in Europe to come together through the European Union is one expression of this.

If Egypt can detonate and assist the movement in Wisconsin, in the belly of the beast, the US itself, imagine if Britain was to go socialist. It would begin to transform the world. The same would apply in any country in Europe, or for that matter the relatively developed countries in Latin America or Asia.

B: Well you’ve made a convincing case. I’ll buy your paper.

S: Thanks very much. You should think about joining the Socialist Party now!

Special financial appeal to all readers of

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March 2011