Friday 1 October 2010

Capital's Public-Private Partnership

It suits the coalition's agenda to oppose the private to the public sector. Never mind the public sector provides the essential social and institutional core functions private capital depends on, as far as the Tories and the LibDems are concerned it is economically unproductive and represents an overall drain on the British economy. A recent letter from a Disgusted-of-Tunbridge-Wells-type on the ever-awful Ceefax letters page illustrates coalition thinking perfectly. The gist of it went something like this:
Making civil servants redundant is a good thing. If the taxpayer has to pay out Job Seekers' Allowance instead of exorbitant salaries then this is a worthwhile cut.
Leaving aside the lazy and ideological assumption that public sector work is all waste and produces nothing, it demonstrates the coalition's compartmentalised understanding of how capitalism works. The private sector is the source of wealth, and the public sector via the state drains it away. There is no recognition of how the two are conjoined and mutually reinforce one another.

Profits, salaries and wages are taxed to pay for a number of state functions, be it the cost of politics, welfare, hospitals, military, quangos, administration and what have you. That money percolates out the other end in the form of salaries and wages. After this too has been taxed the money is recycled back into the private sector when public sector employees do their shopping, go out, buy luxury goods, head off on holiday, get their hair done and so on. This is then transformed into the wages and profits of the private sector. And as for that little bit left over that some public sector employees squirrel away in savings, this is invested by their bank or building society. And don't forget the private sector firms whose existence heavily depends on public sector contracts too: their activities pay out wages to their employees and allows them to accumulate capital.

I think readers might see what I'm getting at. The relationship between the private and public sectors are a continuum, an intertwined metabolism that helps keep the wheels from falling off British capitalism. If we took the advice of our Ceefax correspondent above, less civil servants and more unemployed depresses spending power and with it the amount of money cycling back into the private sector, which means a lower tax take, redundancies, and so on.

Once you start picking apart the public sector, which is just what the Tories and LibDems are hellbent on doing, the fabric of capital's public-private partnership starts to unravel and the likelihood of renewed recession grows ever greater.

1 comment:

Boffy said...


The standard Marxist position is that State Spending is unproductive in that Labour does not exchange with Capital, and therefore does not produce Surplus Value. The Parxist definition of productive - by which it most certainly does not mean unproductive of wealth - Use Values. However, I have recently argued that this is based on a misconception of what Marx said.

In my blog Value Theory, I was looking at an oold article by Barbara Bradby in Capital Class that was particularly about domestic labour, but also covered this issue. The misconception is this. In the CGP Marx says, “Taxes are the economic basis of the government machinery and of nothing else.” The implication of what Marx says here is that any money raised by the State to pay for other things - such as the provision of goods and services - even if it is called tax is not really but is actually an exchange, a money payment for those goods and services.

The things that workers buy such as food, shelter and clothing etc. form the wage bundle, the necessary cost of reproducing wage power. The labour society spends on producing those items is Necessary Labour. Although, the payment the Capitalist makes to pay for these things is a deduction in one sense from their Surplus Value - which is why they try to minimise it - it is a NECESSARY deduction, because without it they would not get sufficient Labour Power of the right quality reproduced. So they try to reduce the cost of producing those wage goods by introducing new machines, techniques etc. Ultimately, this is why workers living standards rise. But, as I argued in that post above in a modern economy a healthy, educated workforce is just as necessary. Social labour time spent on producing Education and health is also NECESSARY from the Capitalist perspective, and these things are equally commodities as a McDonalds Big Mac. The fact that the Capital that produces these commodities - or sells the insurance to workers to pay for them when needed - is State Capital does not change that fact. The fact that workers pay for these commodities collectively, whilst consuming them individually also does not change it. The State Capital is still Capital, those that produce those commodities be they in state or private run schools or hospitals, are therefore exchanging their Labour power with Capital, and are productive of Surplus Value - whether it is realised or not and who by is a different matter. But, this also explains why Capital seeks to revolutionise production of Health and education too as with any other commodity. Aglietta wrote some interesting stuff on this, which he referred to as neo-Fordism, explaining why many of these functions would end up in the private sector.