Too much social spending? By what standards?

Submitted by martin on 1 November, 2010 - 6:47 Author: Martin Thomas

Do the cuts have to be as big? Or as fast? There is much debate about that. But what about the basic assumption - that there has been "too much" social spending? "Too much" for what?

Q. There has been too much social spending, hasn't there? So the Government has to cut.

A. You mean there has been too much social provision for old people? There have been too many teaching assistants in schools? Poor people have had too much housing?

In theory, such things could happen. If there were so many teaching assistants and care workers that there were not enough people left to produce basic food and clothing, then we'd have to adjust.

But nothing like that has happened. And in any case the government's proposal is not to shift people to producing basic food and clothing, but mostly just to put them on the dole, not producing anything.

If there was "too much" of anything, it was luxuries (some of them ecologically damaging) for the rich.

We know that inequality rose fast under Thatcher, and continued to rise under Blair and Brown. In 1937 the top one percent accounted for 12.6 percent of all after-tax income.

After decades of activity by a relatively confident and strong labour movement, that take was down to 4.7 percent by 1979.

In 1990 Thatcher had raised it to 8 percent. By 2000 it was 10 percent. By 2008 the top 0.1% got 4.3% of all income - the highest figure in the UK since the 1930s, and three times as much as in 1979.

Or put it another way. In April 2010 the Sunday Times Rich List reported that the thousand richest people in Britain had increased their wealth by £77 billion in 2009, bringing their total wealth to £335.5 billion — equal to more than one-third of the national debt.

That £77 billion is about the same amount as the £81 billion which the coalition government proposes to cut from public spending. Why not say that the richest one thousand have had "too much", rather than the relatively poor people who will lose out from the government's cuts? If those thousand had the £77 billion taken from them, they would still be fabulously rich - only rich at their 2008 level rather than their 2009 level.

Q. But Britain has a huge debt to pay off.

A. To whom? Individuals have debts to other individuals, but to whom can a whole society have debts?

Q. People outside Britain?

A. On best estimates, about one-third of the British government's £900 billion of outstanding IOUs (bonds) is in the hands of non-British owners. But then British owners hold IOUs (bonds) from other governments.

The cuts are going on across the world. So the mass of people, all across the world, have to have their conditions cut back to pay off a debt... to whom? The man in the moon?

Q. In fact, most of those bonds are held by banks and other financial institutions. If the governments don't make their payments, and the social cuts which help them make the payments, then those banks and financial institutions will go bust, creating chaos.

A. That shows that we should have a society where the welfare of the majority, rather than the profitability of banks, is central.

Q. How can it work that way? How can it appear that there is "too much" social provision, "too much" housing for the poor, and so on? And how can the "answer" appear to be to produce less, by making more people jobless, when there are already 7.7% unemployed?

A. Marx summed it up like this: "Capitalist production is not merely the production of commodities, it is essentially the production of surplus value. The labour produces, not for himself, but for capital... That labourer alone is productive, who produces surplus-value for the capitalist..." "The restless never-ending process of profit-making alone" is what drives, shapes, and regulates economic life under capitalism.

Economic life based on profit-making generates, in turn, a vast array of transactions based on selling, buying, and speculating in titles to future surplus value.

The banks bought and sold too many titles to future surplus value, and found that many of them could not be made good. The governments stepped in, substituting titles to shares of that part of surplus value which governments can extract via taxes.

Now the working class has to be squeezed so that those titles to future loot can be made good. The cuts are a microcosm of the whole process by which the life of working-class people, now, is subordinated to the capitalist drive to pile up vaster and vaster wealth in future.

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