Thursday 22 October 2015

The Conservative Indifference to Steel

It was like the crashing of dominoes, except the toppling was done by livelihoods, supply chains, ways of life. First, SSI in Redcar announced it was going belly up. And after toing and froing with the government, once it was clear state aid wasn't forthcoming it was as if Britain's steel bosses huddled together and decided the time was right for job losses. 2,200 are going in Redcar. Tata are shedding 1,200 in Scunthorpe and Lanarkshire, and a further 1,800 are in danger. They blame energy costs and the flooding of European markets by dirt cheap Chinese steel. That's the government's narrative as well, ruling out action on grounds it's against EU rules. It's convenient to have someone else to blame.

It is true that global markets are eroding the viability of the British steel industry. It is untrue the government are powerless to do anything about it. Behind each job loss is a personal crisis, and the Conservative Party are utterly indifferent. Never mind that the maintenance of a steel industry is a pretty basic trapping of any country claiming major power status, again strategic security concerns - and maintaining the capacity to make stuff is a security matter - come second to Tory short-termism and stupidity. Then again, this is the party suggesting the new Labour leader is a security threat for past associations with Sinn Fein and assorted unsavouries in the Palestinian solidarity and anti-war movement while they are ceding a chunk of Britain's electricity generation to the Chinese state. But of that another time.

Why are the Tories so reticent to intervene? Is it purely spite? As much as some might think that is the case, it's not. There is what passes for brute rationality: the (wrong) view steel is peripheral to the British economy and employs comparatively few people. It wouldn't bring the whole show crashing down in the manner of a bank collapse. There's the usual idiocy of submitting to the hurricane winds of global competition. And lastly a refusal to countenance a bail out on grounds that if they get one, every industry should get one.

Yet I'm convinced something a touch more complex is going on too, something that reaches into the (sub)cultural and ideological neuroses of the Tories as a collective. There is still, deep down, a fear of the industrial worker. The 1970s casts as much of a shadow over Tory thinking as the 1980s does over ours, which is why the walking dead tropes of that decade are dug up and given fresh meat every now and then. This was their lowest point, of having their government brought down by striking miners and a strong, confident labour movement (apparently) surging forward. And at the forefront of it all were vanguards of workers that had slipped their trade union leash. These were the men who worked filthy, demanding, monotonous jobs. They were dangerous jobs too - not because of the threat they posed to life and limb, but to the risks they posed established order. The bonds that kept the workers burrowing a mile beneath the earth, feeding the blast furnaces and smelting pools, gave them the strength to say no: no to management, and no to the government. The solidarity between workers necessary for their collective safety in the job went beyond the gate and out into the communities clustered around the pits, the steel mills, and the factories. This is what made them potent, and was precisely why Thatcher had to defeat them. 30 years after the Miners' Strike and these communities are much reduced, but they still evoke folk nightmares in the Tory imagination.

Osborne plays with the Northern Powerhouse like a fancy train set, but his idea of an industrial renaissance bears the indelible marks of the 1970s trauma. There is no place for the dirty industry of old (or, for that matter, what Dave calls the "green crap"). It's about the futuristic, of the fast, the clean, and the mindbogglingly complex. Nuclear power stations, high speed rail, graphene, quantum computing, medicines, space, big data. This is the only white heat the Tories are interested in. The workers here fit the Conservative ideal: highly educated, skilled, motivated, entrepreneurial. Some might say embourgeoisified too. This is the edge of the coming wave, and where state aid should be focused. Steel mills? They've had their day, best to abandon them to the pitiless grind of market forces. It's a kindness to let them go, and these communities will be healthier and wealthier once they're weened off their century-and-a-half addiction to primary industry.

Unfortunately, the price paid for the Tory psychodrama are by people out of sight and mind. No cameras will be filming the heartbreaking scenes in thousands of homes. No London journos chronicling the further decline of already depressed towns and regions. These people, our people, are being left to rot. How many more will this happen to over the next five years?


Anonymous said...

Ok. So if you were Chancellor, what would you do? Public subsidy of private profit? Nationalise? Money for steel at the expense of money for health?

Let's hear it.


tonyh said...

Or the use of public money to maintain a strategic industry and its supply chain with the results that steel workers continue to pay tax and are not forced to become dependent on what the last poster would probably regard as 'generous state handouts' in the form of the dole. I'm a bit biased on this issue, living in Sheffield, but the money for steel or health antithesis is simplistic; the actual issue here is the political choice of maintaining a viable and vital industry in the short to medium term as against losing the industry at an ongoing cost to tax payers until the day when places like Redcar and Stocksbridge fall into line with Gideon and Javid's post-industrial non-vision.

Boffy said...

One thing that would be of benefit to the actual steel workers and their families is that instead of the government channelling the supposed tens of millions of pounds into "programmes" for retraining and so on, they should just give this money directly to the workers directly who have lost their jobs.

In fact, it turns out that a lot of the money the government has promised is to go to cover the redundancy payments that the firms themselves should have been paying out.

But, the more important point is that whenever situations like this arise, governments announce these "programmes", which means that the workers actually affected see none of it. The money instead goes to assorted quangos, and private companies that specialise in putting on "seminars", providing "training", and other forms of advice on how to find jobs that is pretty pointless if there are no actual jobs being created to go to!

asquith said...

Have you read Charles Moore's book on Lady T, the second volume of which came out very recently? (Imagine the stares I got in Webberley's when I bought it, I've probably got my card marked now!)

This video clarifies my stance on steel:

Anonymous said...

If the steel industry is viable then it does not require public support. If it does require public support, then it is not viable.

Viability means you receive more revenues from sales than you spend in production and distribution. You either make a profit or you don't.

If those who own steel production don't understand that their industry is actually viable, then closing production is clearly a matter of poor understanding. I doubt that is the case. Given the costs and losses involved in writing-off huge historic capital investments, I suspect they have decided their industry is not viable. Most capitalists are able and willing to squeeze a profit out of something if they can. They don't need the state to help them.

Assuming there are limits to how much money can be spent on supporting private companies, then there are choices to be made. It may not be steel vs. health. But more of spending on X will eventually mean less of spending on Y. Unless, that is, we are going to use the 'magic money tree' model of economic policy that lay behind some versions of the Alternative Economic Strategy in the 1979-1983 period.

The left has to be able to articulate a logical case for supporting some industries - and not others. That is not easy - because some like to think that their radicalism is measured by arguing that everyone can every thing they want (not possible under any mode of production).

I would suggest the left develop an industrial policy based on supporting high-skill/high-value added industries. The approach will mean saying: this set of companies and related supply chains will be supported (within limits). And that means X, Y and Z will not. Sorry, but tough. Some of those workers who lose their jobs in industries like steel will receive generous grants to relocate and retrain. But not all can. Sorry, but tough.

Any strategy that says or implies 'all existing industries deserve boundless support because we believe in a big industrial base' is a waste of time. Get specific and get used to saying no.


Phil said...

Steel is a strategic industry. Britain needs it to be able to build stuff, and that capacity should be retained even when the price in tonnage has collapsed. Of course, the government aren't powerless. They can stimulate aggregate demand if they wish. There is a housing crisis and Britain's infrastructure badly needs upgrading. But they choose not to. That's a political decision and has very little to do with underlying economics.

Anonymous said...

A non-answer Phil.

Increasing aggregate demand would lead to increased consumption of imports where domestic producers are non-price competitive. This was the repeated experience of British governments in the 1950s, 1960s and 1970s and led to repeated balance of payments crises and battles to support the value the of sterling.

While the balance of payments and sterling are not as important following the end of Bretton Woods and the abolition of capital controls, the fact remains that those who buy steel in the UK will not suddenly become indifferent to price simply because the government has pumped more demand into the economy.

To argue this is all politics is how some on the left avoid difficult economic arguments. It sustains the reformist illusion that capitalism can be made to deliver full employment and a growing manufacturing base if only the political will were there to make it happen.

Social democratic tosh.


Phil said...

It's not a "non-answer", it just happens to be an approach you disagree with. The alternative, of course, is to nationalise and mothball the plants and wait for such a time when the price recovers. Which it surely will.

As for "sustaining reformist illusions", I think someone here is guilty of sustaining revolutionary illusions. Use that Marxist analysis you're supposedly familiar with: it's not going to happen. Not here, not anywhere in the advanced capitalist countries. The choice for radicals is between revolutionary narcissism of your type, Mike; and a ceaseless battle of attrition that uses government as and when it's in office.

Anonymous said...

The notion that in a capitalist society political will can generate full employment and re-industrialisation is an illusion. I said nothing about revolution. I merely stated one of the more obvious lesions from the 20th century: that there are limits to how states can determine global capital. And rather than learn from that some on the left insist on trying to resuscitate a romanticised Keynesianism - which never worked when conditions were much more favourable than they are now.


Boffy said...

"And rather than learn from that some on the left insist on trying to resuscitate a romanticised Keynesianism - which never worked when conditions were much more favourable than they are now."

I'm not exactly sure when this more favourable period was supposed to be! For example, there are masses of profit that has been produced over the last 30 years, which is why we have interest rates at 300 year lows, as those profits have flooded into money markets.

The likelihood of Keynesian fiscal stimulus causing "crowding out" as was the case in the 1970's is very unlikely, therefore. Moreover, Keynesian intervention as a response to the five recessions that occurred in the previous long wave boom period after WWII, did work, as Mandel describes.

Not only that, but they have already shown they work this time round too. As Obama correctly stated a couple of weeks ago in response to Republican calls for austerity, the reason the US has grown more strongly since 2009 than the UK and Europe, is precisely because it avoided the austerity measures taken here, and instead undertook Keynesian fiscal stimulus. It would have worked better still had republicans not frustrated some of those measures at state and local level, and introduced several political crises closing down government over the debt Ceiling, Sequester and so on.

But, a look at the period at the end of 2008/start of 2009 shows that Keynesian stimulus worked here and elsewhere too. UK growth picked up, and in the last quarter that Labour was in office growth was 1% for the quarter, a higher rate than the Liberal-Tories have been able to achieve in any subsequent quarter.

In fact, the extent to which the Keynesian stimulus was working is shown in its obverse, the extent to which the economy tanked when the Tories even began to talk about austerity, let alone before they introduced it!

The only people who seem to deny this today are an unholy alliance of the catastrophist left, and the conservative right.

Boffy said...


I think this is an important point.

"The choice for radicals is between revolutionary narcissism of your type, Mike; and a ceaseless battle of attrition that uses government as and when it's in office."

Over the last few months I have been making a similar point in the letters section of the Weekly Worker, in opposition to the position set out by Eddie Ford.

Marxists do not in any way give credence to the idea that socialism can be created by the state - be it the existing capitalist state, or some future state - let alone, by a government, and simply handed down to the working-class. It can only be created from the bottom up, by the working-class itself, which acts to liberate itself, and progressively establishes its own self-government.

However, that does not at all mean that we are indifferent to what can be achieved by even social-democratic parties. Those social democratic parties are the manifestation of the interests of socialised capital, which Marx outlines is a transitional form of property. As Engels pointed out this big socialised capital, does not logically see things such as trades unions as antithetical to its interests, in the way that private small capital does, for example. It certainly doesn't see the welfare state as antithetical to its interests, which is why China is looking at introducing some form of welfare state, not only to regulate the supply of labour-power, but also to reduce the high savings rate, and raise consumption.

Marxists do not see the solutions that social democracy provides as adequate, or socialist solutions, but that does not mean we are indifferent to them as against more conservative solutions, as Marx outlined in his article on "Political Indifferentism".

We are not indifferent as to whether a Labour government is able to sweep away anti-trade union laws, for example.

In relation to Greece, for example, its not a matter of whether Syriza's programme was socialist - it wasn't - but whether it provided the basis for workers and socialists across Europe to rally around an alternative to austerity. Again simply opposing austerity is not equal to a struggle for Socialism, any more than being able to engage in trade union activity represents a struggle for socialism, but both of these things facilitate the activity and self-organisation of workers, and as such create better conditions for a struggle for socialism.

As lenin himself put it, revolution itself is usually the culmination of a series of reforms on the way to it. Syriza's mistake was not in taking office, to engage in what the WW seems to believe was an impossible mission, but that it failed to give the necessary emphasis to building an EU wide movement against austerity, and the current basis on which the EU is organised. Its not pursuing a keynesian fiscal stimulus is wrong for social-democrats at the present time, but their failure to link this with the development of workers self-government, across Europe.

Anonymous said...

I agree with quite a lot with what Boffy says.

The issue is not that socialists should counter-pose revolution to particular problems such as the closure of a large steel plant. That is a guarantee of political irrelevance (see the Weekly Worker for ample evidence of this).

But among socialists we need to be clear about how the state and capitalism works. In recent years some socialists have abandoned their past rejection of Keynesianism and have begun to argue that in both theory and practice the capitalist economy can function at full employment, sustain particular industries regardless of cost, expand public services almost without limit etc - if only governments and political leaders understood how the capitalist economy really works and had the political will to act accordingly.

In short: capitalist crises and their consequences are a function of misunderstanding and cognitive failure.

I will support any campaign to save jobs and communities from closures and govt cuts.

But there is a difference between doing that, and arguing (as some do) that the fundamental contradictions of capitalism can be overcome to the sustained benefit of the working class. Marxist theory and (more importantly) history shows that is simply untrue.

It is one thing to argue for reforms - another to effectively argue for reformism.

Some socialists, especially in recent years, have slipped from supporting reforms to articulating versions of Keynesian theory that legitimate reformism.

The conditions for a radical Keynesianism were more favorable under fixed exchange rates, capital controls and import tariffs. In many capitalist countries that was the 1950s, 1960s and 1970s.

I don't doubt that fiscal stimulus can boost growth and employment - for a while. If capitalists use such periods to restructure production so that it is conducive to restoring profitability, rather than simply reaping extra profits from additional demand, then such stimuli can help to sustain certain industries.

The problem (as Callaghan, Healy, Thatcher, Howe and Lawson knew very well) becomes one of expectations. If industries expect the govt to stimulate demand when the world economy gets tough, they are less likely to undertake fundamental restructurings of production (such as cutting wages, intensifying work, undertaking high cost/high risk investments in new technology etc).

Rather, they are more likely to wait for the govt to deliver profitability to them via fiscal and monetary means.

Under such circumstances the state then becomes a default guarantor of private sector profitability - with inevitable consequences for public finances, debt and capacity to spend on other things.

Phil argues that a revolutionary transition to socialism is 'never going to happen.' I don't think it will happen anytime soon. But I don't have access to the crystal ball that enables Phil to announce the end of history. Rebuilding a radical left will likely take decades - and even longer if we subordinate our understanding of capitalism to what anti-socialists determine is the case.


Boffy said...

I don't think fixed exchange rates and so on, i.e. the nationalistic elements of the AES do favour Keynesian fiscal stimulus. Indeed, I think that the social democratic ideas of the Left at that time, were a logical representation of the interests of socialised capital, as against fictitious capital - apart from those nationalistic elements. Had the Left in the Labour Party, pursued the kinds of ideas that were already established in Germany, and which were covered in the Bullock Report on Industrial democracy, and even introduced for discussion by the EU, rather than focussing on an anti-EU stance, import controls, and other statist measures, Labour may have won in 1979, and the history would have been different.

Certainly had a Labour government had access to the £80 billion of taxes from the North Sea that Thatcher squandered, the potential for a restructuring of infrastructure and of the socialised capital would have been possible, rather than simply funding high levels of unemployment as part of an ideological attack on workers organisations, and the furtherance of the interests of the owners of fictitious capital.

In fact, the real basis for a more rational and successful application of Keynesian intervention, as with other social democratic measures is in reality the application of such policies within a much larger economic structure, such as the EU. That is not to say that such social democratic measures are socialist, or that they can overcome the fundamental contradictions of capital. But, they can within limits and at particular periods create more favourable conditions within which workers can operate. That is the lesson that should be learned by the Corbynistas, and Podemos and others social democrats across Europe, also from the lessons of Greece.

But, as I've set out in a new blog post that will be appearing later today examining the nature of "socialised capital", its also necessary to understand the basis of social democracy as resting upon the material basis of this socialised capital, as opposed to conservatism resting upon previous forms of capital (capital as private property) and on fictitious capital, which is the main form of wealth held by private capitalists.

The points outlined within it by Marx and Engels can also be summarised by the point made in the Erfurt Programme by Kautsky,

"It was Marx and Engels who first set forth these facts and explained the scientific laws that govern them…

“The corporation renders the person of the capitalist wholly superfluous for the conduct of capitalist undertakings. The exclusion of his personality from industrial life ceases to be a question of possibility or of intention. It is purely a question of POWER.

This preparation for Socialism through the concentration of capital is meanwhile only one side of the process of gradual growth into the future state. Along with it there is proceeding an evolution within the working class that is no less of an indication of growth in the direction of Socialism."