The left & the state

In the twittersphere Bella Gerens claims to be confused about the left’s attitude to the state. “They blame the bankers for the country's economic crisis, and yet they don't seem that pissed off at the state for handing the bankers massive wads of cash” she says.
This draws attention to a debate the left should be having - but isn’t - namely: to what extent can the state be a means of achieving leftist ideals?
There is abundant evidence that the state, as it has been used in the past and present, is not a great tool for the left:
- efforts to tax the rich or companies either fail or end up falling upon workers
- despite huge parliamentary majorities, New Labour did very little to reduce inequalities of wealth or power
- semi-nationalization of the banks did little to curb bankers’ pay, or make banks act in the public interest
- fiscal policy and big government haven’t reliably improved the fortunes of workers relative to capitalists
- public ownership in the 1980s was used by Thatcher as an instrument of class war, whilst social housing was sold off to buy her votes
In such ways, the state either fails to advance the left‘s goals, or actively fights against them.
Now, I don’t want to deny that state intervention has done some good for the left; one could easily argue that things would have been worse for ordinary people without its influence. But, surely, the history of using the British state to reduce inequality consists largely of 100 years of disappointment, punctuated by Clement Attlee.
Responses to this fall into two camps. The dominant camp, associated with the likes of Richard Murphy and Polly Toynbee, seems to take a “one more heave” view; if only we could try harder, the state will succeed. The other camp, which includes me and other Marxists, thinks we should infer that there are strict limits upon what the state, at least as conventionally used, can do to ameliorate the inequalities generated by capitalism. In this sense, we have something in common with right libertarians, except that we say in sorrow what they say in joy.
You’ll note, though, a qualifying clause in that last paragraph: “as conventionally used.” Too often, the left has viewed the state as a means for doling out favours to its passive clients. There is, though, an alternative way of viewing the state - as a means whereby ordinary people can be empowered to take more control over their own fate. To use Marx’s phrase - “force is the midwife of every old society pregnant with a new one” - we should ditch the nanny state and have instead a midwife state. For example, bank nationalization could have been used as a means for putting banks under genuine democratic control.
This, though, raises two questions: what would the state’s midwifery skills consist in? And: is capitalist society really pregnant with a new one? I don’t know. But I wish the left would at least ask more. 
A counter-argument: is the increasing economic power of women since the 60s an example of how the state has successfully pursued leftist goals? Or is it instead an example of my midwife role? The state responded to feminist movements,- sexist society was "pregnant with the new egalitarianish one" and provided a framework in which women could narrow the inequality with men via their own efforts.

Comments

[Jackart]

Are you sure the state doesn't reflect changes in legislation which would have happened anyway?

[Rob Spear]

Are you sure that putting the banks under genuine democratic control would further the ends of the left?

[Harmonious Jim]

Funny how both of your metaphors, nannying and midwifery, assume we need to be treated like infants or children.

[Biffy Dunderdale]

I think if the Left pursued this approach, it could emasculate the Right. Or,more positively, this could be a unifying factor in politics.

Good, smart, different thinking.

[Mariana]

Thanks for such an intelligent and interesting post.

[CharlieMcmenamin]

"There is, though, an alternative way of viewing the state - as a means whereby ordinary people can be empowered to take more control over their own fate."

Well, yes, : as I'm fairly certain you're aware, there was quite a lot of left thinking on these lines 30 yrs - 'In and Against the State' and all that. Such thoughts were not confined to the unelected margins either: in a way, this was a wellspring of the policy orientation of the old Livingstone led GLC for instance.

But time has moved on and now we have a 'contractor' state, halfway through a generation long reconstruction on default lines of commissioning services on a strict contractual basis with ever more closely defined contractual targets. The space for a GLC style approach is much more limited I'd say. The right had updated its view of the state but the left hasn't, partly because it has been fighting against these developments.

[Charles Wheeler]

"Now, I don’t want to deny that state intervention has done some good for the left; one could easily argue that things would have been worse for ordinary people without its influence."

Yes they would.

"But, surely, the history of using the British state to reduce inequality consists largely of 100 years of disappointment, punctuated by Clement Attlee."

No it doesn't.

The history of the last hundred years shows that the state had an amazing effect on ameliorating the more pernicious excesses of free markets. At the end of the 19th C. laissez-faire was entirely discredited as a failed system which unashamedly left millions in abject poverty with no hope of escape - a fact grudgingly acknowledged by businessmen like Charles Booth, and anatomised by social theorists like Hobhouse, who saw that the free market could only bring greater and greater inequality. The big lie of liberal economics - that it would bring wealth to all was laid bare.

The slow climb out of such gross inequality began with the New Liberals and, with some peaks and troughs, achieved much by the 70s - when healthcare, education, pensions, social care and other forms of social protection made lives more tolerable for most of society.

Whereupon the welfare state became a victim of its own success, as people were encouraged to believe that 'the market' had and would provide. As a result our grandchildren seem doomed to live in a society as unequal as the one our grandparents were born into.

Obfuscation by professed 'Marxists' that adhere to the neoliberal myth that the democratic state is past its sell-by-date are part of the problem.

The state is the ONLY institution through which democratic choices can be made - as nanny AND midwife - and, in spite of the critics, has ensured a much greater degree of SOCIAL JUSTICE (a term Hayek didn't recognise) than would have been the case had the market been unleashed 50 years earlier.

... unless you can come up with something more concrete than your typically (and I presume intentionally) vague conclusion! It's always easier to sit on the fence.

Thanks to the state, I had the option of a debt free university education, I've never had to worry about the prospect of medical bills bankrupting me (though that could be about to change), my children have had a decent education, my parents have had a comfortable old age. None of this would have been true had Attlee not had the courage to gainsay the detractors, who claimed the government could not afford to provide these things through a transfer of income and wealth - before the levers of power were handed back to an unaccountable financial oligarchy - that was more than a mere 'puntuation'.

But unless those who unceasingly profess left of centre leanings fight against the dominant ideology, rather than endorse it then, yes, it may prove to have been a failed rearguard action.

Then we have the question of how long a brand of capitalism which impoverishes the majority (as it surely must) can retain any legitimacy. Or what anyone could do about it once entrenched. It's probably time to spell out your alternative to the admittedly confused, fumbling, flawed but comparatively successful, gradualist approach of the first seventy years of the last century, rather than sit magisterially on the sidelines!

[ohwilleke]

Your link on the incidence of corporate taxation is not the mainstream or more strongly empirically supported conclusion from economics on the subject.

The Felix model relied upon by that link has rightly been criticized for using a patchwork of inconsistent data, for ignoring non-tax facts in corporate decisions to locate operations in particular markets, and for implausibly estimating $4 in tax burden for every $1 of tax collected. The mainstream approach is to recognize that labor markets for rank and file workers are efficient and set a market clearing price that is indifferent to corporate tax rates, and that the impact of corporate tax rates is carried mostly by shareholders and senior management (who get most of their income from share prices anyway). Indeed, wages for comparable work are actually higher in entities subject to corporate income taxes than those that are not (just as they are higher in union shops than non-union shops).

The empirical data also shows that productivity, economic growth and per capita GDP are largely indifferent to tax rates and tax mix. Taxes impact GINI coefficients much more than they do GDP growth, and indeed, if anything, the states with more GDP growth, controlling for "catch up effects" from copying technology, are those with higher taxes.

The comparison of income v. consumption taxes is impossible to disaggregate from the comparison of high v. low tax rates because high income, payroll and consumption taxes are part of an overall pattern (the Western European model).

Almost all of the differences in wealth and power between the U.K. and the U.S. are directly attributable to tax policy and the social welfare net. The pre-tax and pre-transfer payment income distributions are very similar, but the U.S. has far more inequality in wealth and income after the fact due to the combined impact of its tax and transfer payment system. "Big government" in fact is essential to improving the fortunes of workers relative to capitalists in almost every economy but Japan, where big business operates in a paternalistic way that produces similar results. "Small government" countries are almost always more biased towards capitalists in practice.

Semi-nationalization of banks has done little because the banks continue to be managed as if they are private enteprises, not run as if they were government agencies or non-profits. Fiscal policy is pretty irrelevant unless it is wildly off base.

[Jim]

I would have thought the Left's love affair with the State was obvious - the State has the power (both legislative and ultimately physical) to force people to do things they would not do voluntarily. As Socialism tends to want to force part of society to do things it doesn't want to, having the power to make it do so is rather seductive. I don't see many voluntary Socialist societies.

[Lee T]

If the left is to bring down inequality then it needs to abandon it's obsession with income (and the taxation thereof) and take on actual wealth, and the public as a whole need to buy into that. How many progressive leftist governments have held power over the last 100 years, and how many have dealt with the unearned inherited wealth of, for example, those who own most of the land in this country?

The only wealth tax we have is inheritance tax, and that is so ineffective and unpopular that the conservatives gained popular support for all-but eliminating it.. despite the fact that lowering the threshold and raising the rate would be in the best interests of almost everyone.

The state should look to level the playing field, and just chipping away at what people earn, whilst letting the residue accumulate unencumbered for generation after generation, means that those born with advantages will see them compound, whilst those born without never get started. This is going to get worse as today's middle classes leave greater wealth (expensive properties, non-annuitised pension holdings) to, comparatively, fewer offspring.

A genuine attempt to tackle inherited economic advantage would be a state function consistent with any good leftist policy, and also with right libetarian ideals (at least before they are corrupted by selective interpretation and self-interest). Instead of keeping capital and assets tied up passively benefitting the undeserving rich, have the state recycle them back into the productive economy.. surely that would benefit 95% of us? Or maybe we can stick to complaining about the tax applied to the relative pittance pain in banker bonuses.

[Keith]

Part of the difficulty is how much equality do we think is desirable? Some kinds may go too far and secondly maybe only State power can create the equality by force. Getting people to consent to the reduction of inequality requires persuasion by supporters of equality as well as effective mechanisms to achieve it. Atlee got the votes to effect certain socialist measures and did so from a base of a active self aware Labour movement. If you want achievements you need to talk about equality rather than run away from it like Blair. Then your parliamentary majority means something.

[Tim Almond]

"is the increasing economic power of women since the 60s an example of how the state has successfully pursued leftist goals? "

The main driver behind the increasing economic power of women since the 60s is the growth of cars, fridges, food technology and reliable washing machines which liberated women to allow them to go to work, and further encouraged young women to pursue careers as they knew that they could work beyond having a family.

The feminist movement was a reflection of that, not the driver of it.

[Mike]

Chris, Have you read Peter Botsman and Mark Latham,The enabling State, which is a series of sketches on the lines you suggest?

[toryboysnevergrowup]

I am not sure that the argument that the State has no effect on redistribution is entirely true - don't the IFS studies indicate that tax and benefit changes during the last Labour Government were redistributive, it is just that changes in pre-tax income went even more in the other direction hence inequality increase overall. Without the State inequality would have increased even more - which is of course what will happen under the Coalition.